Maintaining accurate records of your income and expenses is one of the skills you should learn for any business. It doesn’t take much to lose a sizable chunk of potential earnings. Poor account management will cause you to lose track of not only the sales you have made but also possibly start to lose track of the costs associated with running your company. You won’t be aware of your genuine monthly profits if you find yourself in a situation where you start to lose track of your spending.
If you have a business loan or any other form of collateral against your company, such as properties or assets, this might be very concerning.
If you don’t keep good records of your sales vs cost of sale, you run the danger of losing those assets. Additionally, you can be losing thousands, if not tens of thousands, as a result of market movement without even realising it if you are selling your goods or services such as these dressing table chair at a profit margin that is decreasing year over year and is perfectly in line with inflation.
That is why an accountant can be highly vital for your organisation. I used a Philadelphia-based accounting firm that kept track of all product costs of sales before calculating the gross profit and annual inflation with a small increase in the less noticeable costs of sales.
Despite the fact that it did not appear as though we had lost any money, we actually lost £21,000 in a single year as a result of the inflation-related increase in cost per sale because we did not increase the volume at which we were selling those products or the cost of the products’ procurement.
Work with an accountant. Your company depends upon it.