Thursday, 2 Nov 2023
Seasoned entrepreneurs who are not satisfied with one stream of income and often launch or acquire new ventures. They may set up subsidiaries or build completely independent entities that help them to keep their passion alive. They know the tricks of the trade and have the insight to manage several small ventures together with the help of a strong team.
However, when it comes to managing the finances of all the businesses, finding time becomes a challenge. Also, different entities have unique financial and data processing needs that cannot be time-consuming.
Thus, it is necessary to hire a renowned bookkeeping company in Melbourne to keep the books updated and organised. Here is how the experts handle bookkeeping for multiple businesses or ventures. These tips will help you understand the overall financial health of the parent brand.
Bookkeeping for multiple businesses requires collating the financial data of all the entities to create a consolidated report and an integrated system. Here is how it can be done effectively.
Automation can reduce the workload of collecting, recording and analysing financial data of several businesses. Thus, reputed bookkeepers Melbourne suggest using accounting software to consolidate data from multiple ventures. These systems can help go paperless and keep track of accounts payable and receivable.
It can generate financial reports and help get an overview of the performance of the parent brand through consolidation of the data. However, you must choose the software that can help customise bookkeeping tasks for different entities, regardless of their size and type.
Entrepreneurs may use the same business bank account for all their businesses. However, it can create a problem in differentiating between the transactions of each legal entity. It can become challenging to calculate taxes and the correct bottom line for each business. Therefore, it is essential to have separate business accounts for every venture owned by the same entrepreneur.
It will allow you to look at the financial well-being of every entity separately and understand their strengths and weaknesses. It helps to keep track of the assets, liabilities, profits and losses for individual ventures and use these numbers in the accounting software for accurate calculations.
Since every business is an independent entity, its financial data must also be separated. The accounting software should have separate accounts for each business to record transactions and store invoices, bills, and tax receipts. They must have a unique chart of accounts to track the transactions accurately and streamline the flow of information.
The chart of accounts helps bookkeepers in Melbourne reconcile bank accounts to ensure the accuracy of records. It is also beneficial in tracking the income and expenses of each business, along with payroll and taxes. It helps file taxes correctly and claim tax deductions for relevant expenses for each entity.
Business data is also used by Melbourne bookkeepers to identify opportunities and offer financial advice to entrepreneurs. Also, the business stakeholders need financial information to determine their return on investments. The accounting software helps in this regard by maintaining transparency and providing error-free reports to all authorised users.
Whether they need a consolidated report for the group or individual businesses, they can access the information online. The intuitive interface and the easy-to-understand dashboard give the desired information quickly. The centralised access to data helps in a clear understanding of financials.
Cash flow forecasting is done by Melbourne bookkeepers on the basis of the financial data of the entity. Thus, multiple business owners have to ensure that they have separate budgeting and forecasting tasks for all their ventures. It helps to allocate funds and prepare for the upcoming sales season.
The bookkeepers prepare cash flow projections based on the past performance of the entity by listing down the expected inflow and outflow of capital. With this information, they can make improvements in individual ventures to boost their profits and reduce costs. It ensures that every unit in the network is performing well.
Although you must keep the income and expenses separate for all the businesses, the costs can be shared using a common bookkeeping system. Similarly, entrepreneurs can reduce expenses by distributing expenses across entities to take advantage of economies of scale.
It can include hiring a lawyer, finding a supplier and other third-party service providers who can offer services for all the entities. They can be paid more for the extra work, but hiring new people can cost much more. Bookkeepers in Melbourne help with such cost-cutting measures to ensure cumulative success.
Establishing several businesses under the same parent brand is a profitable growth strategy that farsighted entrepreneurs have mastered. It helps to capture a bigger market share. The tips above allow them to manage their finances using an integrated system and financial advice.