Running a produce business can be challenging, especially when it comes to accounting. Trying to keep track of inventory, sales, and expenses can be daunting. Fortunately, there are ways to make the process easier.
One way to counteract the time-consuming nature of accounting for produce businesses is through Silo’s produce accounting solution. This platform gives you a comprehensive overview of your business’ financial health and consolidates everything for one singular source of truth.
In this article, we’ll share some additional tips so you can simplify the accounting process.
Understand the basics of accounting
The first step to making the accounting process easier for your produce business is to understand the basics of accounting. Many produce business owners feel overwhelmed by the accounting process because they don’t understand it.
If you can take the time to learn the basics, you’ll be in a much better position to manage your business’ accounting. There are many resources available online to help you learn.
Maintain good recordkeeping
Good recordkeeping will make it much easier for you to track your expenses and income. Without organized records, overseeing your finances and ensuring that your produce business is profitable becomes nearly impossible.
There are a few key things that you should keep records of:
- Inventory: You’ll need to know how much produce you have on hand at all times. This will help you determine what needs to be ordered and when, and can also alert you to potential issues with spoilage.
- Sales: Keep track of what is selling and when. This information can help you adjust your pricing and produce offerings as needed.
- Expenses: Knowing where your money is going is critical to running a profitable business. Track everything from the cost of goods sold to advertising expenses.
Hire an accountant
If you want to make the accounting process easier for your produce business, you should consider getting an accountant. An accountant can help you manage the financial aspects of your business.
While getting an accountant will cost you money, it can be well worth it in the long run.
An accountant can help you with a variety of tasks, such as:
- Keeping track of your finances: An accountant can take care of all the recordkeeping for you. This will free up your time so that you can focus on other aspects of running your business.
- Filing taxes: An accountant can help you file your taxes and maximize your deductions. This can save you a significant amount of money come tax time.
- Managing payroll: An accountant can also help you with payroll, making sure that your employees are paid on time and that all the necessary taxes are withheld.
If you decide to hire an accountant, be sure to choose someone who is experienced in working with produce businesses. You should also ask for references and look at online reviews to make sure that you’re hiring someone who is reputable.
Outsource your accounting
On a related note, if you want to take the stress out of the accounting process, you should consider outsourcing your accounting. There are many companies that offer accounting services to produce businesses.
You don’t have to necessarily hire a person though—you might consider looking for software that helps you automate many of the tasks involved in the accounting process.
Note important produce industry terms
It’s important to be familiar with some key produce industry terms. Knowing the lingo will help you better understand financial statements and other documents.
The Cost of Goods Sold (COGS)
The Cost of Goods Sold, or COGS, is one of the most important aspects of accounting for a produce business. This metric indicates all the direct costs associated with producing your product, including raw materials, labor, and shipping.
To calculate your COGS, you’ll need to track all of the expenses associated with production. This can be daunting, but it’s absolutely essential for proper accounting.
Another important aspect of accounting for a produce business is inventory. You’ll need to track the quantity of each product that you have in stock, as well as the cost of each product. Inventory can be tricky to manage, but it’s necessary to keep your business organized.
Accounts receivable and payable
Accounts receivable includes all the money you’re owed by customers who have not yet paid for their products. Meanwhile, accounts payable deals with what you owe suppliers for raw materials, labor, and other expenses.
To properly account for these expenses, you must keep track of all invoices and payments. This can be a time-consuming task, which can be made more efficient with technology.
Financial statements detail the information about your company’s finances, such as income, expenses, assets, and liabilities. To properly account for your business, you must keep accurate financial statements.
There you have it: how to make accounting easier for your produce business. By taking into account these tips, you can ensure that your business’ financial aspects are all in order. That way, you’ll be able to focus on growing your business as needed.