As with any business, franchise owners can expect some risks and advantages of owning and operating a franchise. Getting started with a franchise can be a very rewarding endeavor, as this product has already been tested and refined, helping you to start something from the ground up, but with a little help. The plus side about owning and operating a franchise is that many aspects of the business model have already been tested and there are practices and procedures already in place to help you run your business successfully. When it comes to the financial side of franchise accounting, avoiding some common mistakes is key. Here are our top three tips for franchise accounting.
1. Employee Management
In most all franchise operations, you’ll need employees, which means that you’ll need to find a team, provide training and get them fully ready to represent your franchise. Constructing an employee schedule and wage system is required, and you’ll also need to be sure that your franchise is adhering to proper tax laws, specific to franchise operations.
Using payroll software can take a lot of the guesswork out of many aspects of employee management. Not only can it help you pay your employees, it also calculates correct taxes. Utilizing a time clock is also recommended, so that you have an accurate reading of all employee hours worked at any given moment. By having these systems in place, you’re able to focus on your team and your business more effectively.
2. Managing Debt & Cash Flow
Many franchises tend to start with quite a bit of debt, simply due to the fact that much has to happen before the doors even open for business. It’s important to know your finance options and keep a close watch on everything that is coming in and going out of your business. Setting up automatic payments can be beneficial to keeping your franchise on track. Missed payments can carry a hefty penalty, so it’s best to avoid them altogether.
Having a budget in place is crucial to cash flow management. Keep in mind the following expenses to accurately draft your budget:
Having a system in place that can track all transactions can lessen the likelihood of overlooking an expense or accidentally omitting something from your budget.
3. Hire a Franchise Accountant
There are a lot of moving parts when it comes to being a part of a franchise operation, which means that one mistake has the potential to cost you. That’s why having access to a professional, who specializes in this industry can be extremely beneficial to the future of your business. A franchise accountant can assist you in managing your tax liabilities, aiding with finances, assessing debt repayment and providing the knowledge that you need to ensure that you’re going about your franchise operation correctly.
The Importance of Managing Your Franchise’s Finances Correctly
There are key elements to the success of any franchise, and having procedures in place can help to prevent some of the fallbacks that many franchises face. Because there is a lot of debt right out of the gate, it can take a while for a franchise owner to be able to make up for that, and this can be where many franchises fail. Keeping a close watch on your cash flow, debt responsibilities and everyday operations can help you to avoid trouble. Having systems in place, like payroll management, time clocks and transaction tracking software can help you to be able to focus on making your franchise operation successful for years to come.
The franchise experts at Bodine Perry are ready to help you get the most out of your franchise operation. Call (855) 851-8318 or visit www.bodineperry.com to get started with our team.