6 Effective Accounting Tips for Landscaping Companies
How can you operate a successful landscaping company? Professional landscapers ask this question all the time. But the secret to running a successful landscaping business lies in understanding your finances. By understanding your finances, it becomes easier for you to maximize profits, apply for landscaping business loans, plan for future growth and expansion, manage revenue, and generate cash flow.
In light of this, be sure you follow these effective accounting tips that will enable you to gain control over your finances and grow your business.
1. Create a Budget Plan
Creating a budget plan is necessary for every business, regardless of its size. By coming up with a financial plan for future expenditures, you can ensure your business will have the resources to fund financial commitments, as well as unforeseen expenses.
Landscaping companies can benefit much from budget plans as it can help predict what your company will need based on revenue projections. You’ll know whether you need to hire more employees, purchase vehicles, as well as other necessary equipment.
As you create your budget plan, make sure to organize your pricing strategy – preferably by the type of service offered. Furthermore, it also determines the number of employees you’ll be hiring. You can include a ‘wishlist’ for extra capital needs for landscaping equipment, office improvements, vans, computers, and much more.
2. Track Expenses
There are a lot of tasks you’d rather do than track your expenses. If you’re not religiously tracking your expenses, you might be overlooking tax write-offs that can be beneficial for your business. A business credit card is a great way to track expenses without much effort. However, you do need to pay your dues on time. Many business credit card providers feature a service of categorizing your bills into different types of expenses.
If you’re meeting with clients and you go out for lunch or coffee dates, you can note the bill in your calendar to help you with auditing. In this way, you can demonstrate your expenses for tax purposes. Landscapers often drive long distances to meet with clients in their homes, so make a point of keeping track of car mileage as well. A great aid is using Google Maps to see how far you’ve driven and the costs associated with your trip.
3. Check Your Invoices and Due Dates
Late-paying clients and unpaid invoices can negatively affect your cash flow. If you can’t stay on top of your billing, you can ask someone to do it for you. Create a systematic approach to ensure that your clients are going to pay on time. You can create a second invoice, cold calling them, or enforcing penalty fees for late payments. You can also increase the penalty fee every 30 days. Keep in mind that late payments can hurt your cash flow and interrupt your business operations.
4. Create a Chart of Accounts
A chart of accounts details a complete list of every account in your accounting system. If properly implemented, this can help you further understand the financial situation of your landscaping business. Your company’s balance sheet and profit and loss (P&L) statement are some of the most crucial financial documents that can help provide you with an accurate picture of your business.
The P&L statement forecasts whether your landscaping company is profitable or not. On the other hand, the balance sheet gives you an idea of how much your business is worth. To keep these records accurate, be sure to update them regularly. If you’re going to assign this task to someone else, it’s important to note that the person creating the ledger should understand the industry and bookkeeping concepts.
5. Take Note of Deposits Correctly
Aside from tracking expenses, you should also keep track of the money deposited into your business bank account. Throughout the duration of your business, you’ll make multiple deposits in your account – loans, sales, working capital, and more. If you can’t keep track of the deposits, you may be paying taxes on money that doesn’t translate into income.
6. Seek Financial Advise
A financial adviser can help you prepare financial statements for investors, lenders, and other business stakeholders. They should be able to advise you on how to grow your business financially and help you preserve wealth.
Apply for Landscaping Business Loans
Understanding your business’ financial information is important, especially if you’re going to apply for landscaping business loans. If you need working capital but you don’t know which type of loan you should apply for, it’s best to talk to an expert about it. They can provide some insights about different business loans and suggest the best option depending on your goals and current needs. Remember, every penny counts in your business. With that, it’s always important to get a clear picture of your business accounting. This way, you can spot and remedy the problems early on.