If you manage a small retail store, you know that it’s critical to keep good records. However, between cash flow, inventory, payroll, and many other things you may find important to monitor for your store, it can be challenging to keep track of your operations. This is especially true if you are managing them on your own.
CSI Accounting & Payroll has worked with many retail stores over the past few decades, so we know what good retail store accounting should look like. These five retail accounting tips will help you:
Many retail stores lose money because the markup on products is too low. In every retail industry, we see new people who underprice everything because they think low prices will be how they can compete and gain market share. This isn't necessarily true; markups can add perspective value to your products as well.
Whether you use QuickBooks, Xero, or another software solution, you know that keeping track of cash flow is critical for keeping your retail store in the black. With money flowing in and out of your business through multiple channels, it’s sometimes hard to tell at a glance if your business is profitable.
If you have cash flowing in, chances are, there are probably retail products flowing out. It’s important to keep a steady supply of your products available, but it can be difficult to predict how fast your product will sell and how popular it will be.
If your retail store is in a seasonal location or sells a seasonal product, you’re used to a rollercoaster sales cycle. You also know that staying one step ahead of the game is especially crucial for the limited time you have. To stay competitive, make sure you’re staying up to speed on trends in your industry, especially as you begin stocking for the season ahead. Planning for the end of your season is critical as well.
Smaller retail companies often begin by hiring an annual accounting service to assist with annual tax preparation. However, once you are a more established company or are interested in planning for success further down the road, it is usually a better option to begin outsourcing monthly accounting. You can look into big-name online accounting services as well if you feel they may be a better fit for you than a local firm.
Retail is an industry that particularly needs help from an accountant because of inventory needs.
Often retail stores will go out of business because their inventory is too high and they have no cash. Conversely, if their inventory is too low, then they're not maximizing their sales. If a third-party accountant can compare your inventory to your sales, then they can advise you on the right size of inventory for your business. Inventory is directly correlated to your cash flow.
Tracking your retail operations on your own is a big task! Performing good retail store accounting means you have the insight you need to track your costs, prepare for the next tax season, clarify if you're being profitable or not, and plan for the future. With these five tips - keep track of your cash flow, manage your inventory, plan for seasonal fluctuations, monitor your profit margins, and hire an accountant - you can do just that!
Wondering if it’s the right time to outsource your accounting? Set up a consultation with CSI Accounting & Payroll today to see how we can help grow your business. We’ll support the financial side of your business. In turn, you’ll be able to focus on your product, your team, and your customers. Don’t wait until your retail needs become too complex to manage – schedule a consultation today by clicking the button below.
Looking to learn more about outsourced accounting first? Read about why you should change accountants and common fears in doing so.