Franchise accounting is a necessity for franchisors and franchisees alike, and it does differ from small business accounting in a few subtle ways.
Even if you're not great with numbers, accounting doesn't have to be difficult. Here are seven quick and easy tips for getting the most from your business accounts:
- Before taking on a franchise look at the turnover. By contrasting this with lprtevious figures you have a quick way of working out business performance. Also find the gross profit percentage and compare this with similar businesses in your sector. If things don't ring true, investigate this with your franchisor.
- Once you are a franchisee, wages are likely to be your largest overhead, so they will need assessing. These could be higher or lower than you have budgeted for, depending on the type of sector you're in.
- Next, examine the remaining overheads, but remember to take out personal costs such as the depreciation of assets and your finances. Then adjust the remaining cost to ascertain the amount that an experienced franchisee would spend to run the franchise.
- Play around with adjusting the Net profit of the business to give you a rough idea of the business’s true profitability. In the end, Net profit is what you take home when running a successful franchised business.
- Ensure that you are using the correct VAT rates - that means the rates best suited to your business (such as using a flat rate).
- Check your records each month to ascertain a) who owes you, b) who you owe and c) whether what you have in the bank matches those figures. This way you can catch anomalies as early as possible. Finances take monthly management or they can easily become messy and difficult to decipher.
- Look at all of your monthly expenses to ensure that they are sensible and sufficiently detailed. You could regularly save money here.
Your financial accounting is hopefully now that little bit easier.