Sometimes, it is the seemingly small things you don’t pay enough attention to that come in the way of business growth. Of course, a product or service that people have a need for, talented staff and a clear mission are foundational to move your business forward. But don’t discount the role of basic functions like accounting and bookkeeping in driving growth. From gaining investor confidence to supporting profits, there are different ways in which smart, diligent accounting, bookkeeping, and tax management can help your business thrive.
Financial reports provide investors the raw numbers they want to see
Investors usually have deep knowledge of business accounting as it enables them to do a deep dive into financial statements in determining the growth prospects of companies seeking funding. The completeness and accuracy of your financial reports are crucial in creating a good impression before investors and allowing them to make speedier decisions.
Among the things investors assess is how you finance your operations and look at your company’s balance sheet to calculate the debt-to-equity ratio. They perform financial analysis taking into account your current profits and information in the income statement. Your financial ratios help investors estimate liquidity and default risks. With up-to-date accounting records in place, you can demonstrate transparency before investors while helping them understand future income streams, areas of risk, and where to put money for future growth.
Accounting records provide insights into pricing your products profitably
Product pricing has a huge impact on profitability. An increase in the price of a product can lead to a corresponding increase in revenue and profit, all else remaining equal. To determine a fair and profitable price, businesses conduct market and competitor analysis. In addition, the costs of making or reselling the product are necessary to determine the break-even point. Ultimately, the goal is not to price the product too low or too high.
The costs of making or acquiring and shipping the product are seen in the accounting records. This information is helpful when you’re thinking of changing product pricing. After all, you need the facts on direct expenses and variable costs to make smart product pricing decisions.
Pricing strategies may use the cost of goods sold (COGS) to determine the price at which the product must be sold to increase margins or to boost revenue as a short-term growth strategy. Accountants and bookkeepers can help you work out the COGS so you can find the right pricing balance.
Reduce tax outgo to improve profits
Every small business agrees that efficient tax planning means more money in the bank. While you’re busy with core business activities, your accountant implements tax strategies and planning all through the year. The goal is to reduce the amount of your taxable income, your tax rate, and use all available tax credits and deductions.
Accountants are familiar with the nuances of tax minimisation and won’t pursue strategies aggressively for the sake of reducing your tax burden. To cite an example, small business owners may feel tempted to spend money at the end of the year to save taxes. It often ends up being a wasteful expenditure. A tax accountant knows better and may bring forward expenses or accelerate purchases in the current year if higher profits are expected in the next year.
Acro Accounting and Financial Planning, accounting services, and bookkeeping services help small-medium enterprise businesses make thoughtful strategic decisions that contribute to the desired growth.