BOOKKEEPING TIPS FOR FRANCHISE OWNERS
When it comes down to financial responsibilities, franchise owners in Melbourne have more of it compared to small business entrepreneurs. This is because franchise owners have to make sure that every unit within their network are following the same accounting standard. A Franchise Agreement states the terms and conditions that indicates how units should manage the units’ daily operations.
It is crucial for a franchisee to keep his investment and reach the target revenue by making sure that they are have impeccable bookkeeping and financial management. Therefore, it will be helpful to hire a well-trained bookkeeper in Melbourne to ensure that your company is sticking to the particular financial procedures and correctly handle the taxes, expenditures, and reporting requirements.
On top of these, franchise owners also need to know the fundamentals of accounting, in order to make sure that they are always on top of their finances. Therefore, we have listed the six bookkeeping tips for franchise owners. These will give great guidance to franchisees and help them avoid and/or deal with financial challenges and keep their franchise’s cash flow perfect.
- TAKE ADVANTAGE OF AVAILABLE TECHNOLOGY
With all the recent advancements made in computer technology, bookkeeping software has been widely used these days. In fact, it has become a requirement in the financial recording field. Record-keeping software features so many automatic functions that help ease the burden that comes with manual data entry and free up so much time. It can help manage payroll; create invoices, print them, and send them electronically; and almost every task related to bookkeeping.
Accounting software can be tailor-fitted to meet the requirements of a business in Melbourne. User can store the files in remote servers that can prevent loss of data or infringement of important information. Since calculations are done using the system, there is little to no room for error. Calculations in accounting can be costly, and with the help of an accounting software, you can avoid a wide range of penalties.
Real-time access to data is another great benefit of using bookkeeping software. This ensures that both franchisee and franchisor are updated with the company’s financial status and activities. It helps maintain transparency, while eliminating the need to regularly send information about the financial records to the Head Office.
- STICK TO THE PRE-DETERMINED BUDGET
It’s vital for an owner of a franchise business to have a business strategy that includes a budget and make sure to strictly stick to it. But, in order to follow a strict budget, it is crucial for a franchise owner in Melbourne to know all the recurring expenses of the business including the franchise fee, utilities, salaries, royalties, advertising and marketing fees, etc.
In addition, it is also imperative to have additional budget for unexpected expenditures, such as repair expenses for office expenses. This will help manage the cashflow and prevent shortage of capital. One vital matter that one should always bear in mind is that the initial payment made for utilising the trademarks, patented technology, databases, equipment, etc. needs to be recorded in the balance sheet as intangible assets.
The initial fee needs to be renumerated after deducting it from the tax return, which is the same as the devaluation of non-material assets. When it comes to the renumeration of the initial fee and franchise fee, there is no better to help you than a well-trained and experienced bookkeeper in Melbourne.
- EFFICIENT MANAGEMENT OF DEBTS
Franchising involves a lot of payments such as initial costs, franchise fees, advertising, marketing, and wages. Therefore, a franchisee will need to have enough funding in order to pay off all the expenses required in franchising. To pay all of these expenses, some owners resort to applying for business loans. Now, it is important for these loans to be managed effectively together with the other recurring expenditures.
Bookkeepers are able to help franchisees look for other sources to refinance the business, which offer low interest rates. In addition, a skilled bookkeeper will also help a franchisee enhance the profits by boosting sales, as well as make sure that debts instalments are paid promptly so that it doesn’t incur late penalty fees.
Aside from regular bank and moneylender loans, business credit card debts can be consolidated or refinanced for lower interest rate and reduce the number of expenses. Enhancing revenues, receivables and payables can also help manage the loans without turning it into bad loans.
- KEEPING TRACK OF THE CASHFLOW
Franchise bookkeeping, just like any other business bookkeeping in Melbourne, also requires monitoring the flow of cash. In short, it is imperative that you are always on top of all your business’ finances.
A bookkeeper in Melbourne will carry out bank reconciliation to ensure that all transactions are included in the balance sheet. They will make sure that they are recorded correctly and that there is not mismatching entries in the financial data, while evaluating the financial records with the bank records. This is one of the fundamentals in bookkeeping that should never be neglected.
By eliminating unneeded expenditures, you can control the incoming and outgoing flow of capital. An experience bookkeeper can give you specific details on these expenditures and help you stay away from these expenses so that you can stay within your monthly budget limit.
For example, between buying a new equipment, a bookkeeper, after providing you with financial details, can suggest that you lease a new machine instead so that you do not tie up the capital. They will also help you follow up with your clients to make sure that you are paid on time and they also make sure that you pay your suppliers either in advance or before due date, so that you can keep the funds within your business without leading to imbalance.
- ACCURATE TAX RETURN LODGING
All businesses in Melbourne, whether small, medium-sized or large conglomerates, are required to pay taxes. However, the taxes are different. As for franchisees, detailed transactions including royalties, franchise fees and training fees are required. And apart from these, franchisees are also required to pay revenue tax as well as GST or Goods and Services Tax, while they are paying the franchisor.
A bookkeeper will make sure that their clients are aware of Capital Gains Tax that’s incurred if you transfer ownership or terminate the franchise. You may also want to claim GST credit, for the Goods and Services Tax you paid to franchisor, together with your other payments to the Australian Taxation Office.
Furthermore, franchisees are can likewise file claims for tax deductions on different expenditures. An experienced bookkeeper will help you determine which of these business expenditures can be deducted, and ultimately help you save both your time and money.
- INCREASING YOUR BUSINESS CREDIT RATING
One of the advantages of franchisee in Melbourne is that the business protocols and strategies you’re using are proven. Nevertheless, you also need to ensure that your capital is always growing. There is a belief among new franchise owners that the only time they need funds is at the beginning, for when they buy the franchise. Nevertheless, there are several unforeseen challenges that can emerge at any given time, may incur some additional expenses.
Therefore, it is imperative for a franchisee to always be prepared with reserved funds and working funds for challenging times. In some situations, a franchisee in Melbourne may need more funds if their suppliers or vendors raise the prices of their goods or if you are in need of new machinery. Since it is important for businesses in Melbourne to have a reliable credit history to get loans for moneylenders and banks.
Getting a good credit rating or score means paying your debts ahead or on time. It also means ensuring that all incoming payments also come on time. Doing this will help improve the bank’s confidence in your business. Banks and moneylenders may even offer you the loan without any postponements or hassles.
To run a profitable franchise, a franchisee needs to adhere to the terms and conditions stated by the franchisor. Every aspect of the franchise from operations to financial management needs to be followed accordingly. Therefore, it is important for you to get the services of a skilled bookkeeper in Melbourne to ensure that you are fulfilling all the responsibilities and enhance the financial stability of the franchise.