Cook the Food – Not the Books
A simple, straightforward bookkeeping system is important to you and your business. It is the foundation of a successful business. It is best to have a listing system for the inventory as well as the number of hot dogs you sell in each transaction. With this you are able to keep track of your supplies as well as see the sales that your hot dog stand earns each day.
Good bookkeeping will enable you to analyze your business on an ongoing basis. Your revenues can easily be compared as against expenses. You can also easily determine what hot dogs are best sellers and which ones are just eating space in your icebox. With these numbers, you would be able to make executive decisions on your hot dog stand business.
Good bookkeeping will also save you much time and minimize frustration. With accurate records, you are able to pull up certain factors you can see that affects your overall business. This saves on time on your part, as all the facts are easily determinable. The accuracy is also important as it lessens any headaches you may have when you need fast facts that are accurate.
Keeping It Simple
A key rule of thumb is the KISS principle (Keeping It Simple is Smart). Many people think that bookkeeping and financial statements are highly complicated activities reserved for the realm of accountants only. You can easily educate yourself with many do-it-yourself books on basic accounting. For a small business, this simply is not the case. You can easily learn this. The only skills required are to be able to count, record, add and subtract. Some simple forms for inventory control and profit / loss statements make this even easier. There are many forms downloadable online that you can use for your small business use.
One method used in keeping the accounting simple and easy is to pay CASH up front for all your supplies. This has a few important advantages:
- You should get better prices for paying up front compared to paying on account in 30 days. You can also leverage on discounts if you pay up front. Also, you are able to budget your cash for the month.
- You are able to quickly determine the success of your recent activities. Since you get the full delivery and able to pay it immediately, you can easily determine your profit margin right away.
- There will be no surprises at the end of the month when the bills come in. Since you pay upfront, you can easily project your expenses for the coming month and you will not overlook any unpaid bills.
- Your accounting will be kept to a few minutes each day rather than a time consuming burden at the end of the month. You can do this by having accurate daily records of your hot dog stand’s activities. You can just summarize the daily records into a weekly report and the weekly reports can be put together into a monthly report quickly and accurately.
Keep Accurate Records Daily
Cash does not mean that you don’t get receipts or are involved in shady activities such as dodging taxes. Paying in cash only makes things a lit simpler as there is no more applicable interest or time frame for payments to be made. It is simply a tool to keep accounting simple and to get the best prices for supplies. Paying in cash helps your business in terms of accounting and business pricing.
You will need to keep all your receipts in order to keep accurate records both for your own information and to show government agencies at tax time. In keeping proper records, you are able to see what goes where and when. Without accurate records, you will find it difficult to take advantage of all the business deductions and credits to which you are entitled.
Never rely on your memory. Put it in writing. The day in the life of a food concessionaire relies on quick thinking all the time and not all the transactions can be remembered for your needs.
Keeping your records simple and up to date will also save you money when you actually do need an accountant at tax time. Since the accountant bills by the hour, having everything in order makes for shorter billable hours.
Keep receipts of all business related expenses including day to day supplies, equipment purchases, employee pay, office supplies, business loan interest, and vehicle mileage or fuel (spent driving to work, suppliers, business meetings, etc). Have a filing system for these individual records, or simply an envelope for each kind of expense will help you in the long run. These various expenses are all deductions at tax time and they will really add up over the year. Also having them on hand can help in keeping track of expenses.
Keep business expense items on separate bills from other personal expense items i.e. business food supplies versus personal groceries. Always remember you’re your business is separate from your personal life. You need to make this separation to avoid having complications in the long run. Mark on the receipt what the items were for i.e. a special event or weekly supplies. This differentiates the business opportunities that your hot dog cart participates in. You may have to write in what the items actually are as many stores use acronyms in their descriptions that military pilots would find mind numbing. This will prevent much confusion. It is best that you make a codebook for the codes that you use for your receipts.
Keep your records in a safe place such as a filing cabinet or banker’s box. This keeps them safe and dry and in order. It is of primary importance that you keep separate labeled file folders for the different types of business expenses such as consumable food supplies, equipment purchases, uniform expenses, advertising and promotion, loan interest payments, employee pay, office supplies, vehicle expenses, rent payments, licensing and training, etc. The different expenses have different rates of deduction or different places to go on the tax form. This is important so that you can properly assist your accountant in completing your tax form. Keeping them separate will save a ton of time and money at yearend tax time.
Make up new record folders for each year. If you keep records for more than a year, you would end up with too many records that are not important to your going concern.
