When starting a small business, the primary goal is to keep the business afloat while making ROI and some profit. To keep your business afloat, you need a team of people with specialized knowledge of accounting, tax, and prepping. Understanding your finances and keeping track of the cash being spent is essential run a successful business.
Whether you’re running a small pizza shop or a huge franchise, accounting and bookkeeping are a major part of a business. Franchise system accounting is pretty much the same as business accounting, only with a few differences that you should know.
If you’re new to the business world or you need some guidance with franchise accounting, this blog can help you out. Read on to learn more about the topic!
What is Franchise Accounting?
Accounting refers to keeping track of all the money circulating in and out of the company. If you run a pizza shop and record profit and loss at the end of the day before closing the register, you’re accounting.
Franchise accounting is doing the same for a franchise. It entails recording all transactions such as debts paid, invoices, and other transactions occurring throughout the week or month. The reason franchise accounting is given special treatment is that franchise businesses have unique expenses that other companies don’t.
Having an outsourced bookkeeping company for your franchise system is an excellent option to stay on top of all financial matters and prevent mishaps due to missed deadlines or other matters causing legal liabilities.
Accounting for Franchises
Now that you know what franchise accounting entails, let’s learn more about how one can account for a franchise system.
The simple answer is to hire a professional bookkeeping accountant with relevant knowledge and experience so they can handle all the complex matters of a franchise.
Here are some tips for franchise accounting:
Keeping Records of All the Expenses
There are hundreds of overhead costs, budget planning, and other financial transactions that need to be taken care of daily. Keeping track of all the money transactions, including employees’ salaries, transportation, and supplier fees, makes up company revenue and cash flow. It needs to be managed while seeing how much profit the company makes, excluding those expenses.
Franchise Unique Costs
Every franchise has some unique costs that need to be accounted for. These costs include:
- Royalty fees that franchisors have to pay for their branding
- Initial fees that are paid in the beginning
- Marketing fees
- Amortizing the initial fees in case of loans or installments
Hire an Outsourced Bookkeeping Firm for Franchise Systems
If you’re looking for a cost-effective bookkeeper for your franchise system, you’re in the right place! At Remote Quality Bookkeeping, we have professional bookkeepers specializing in efficient bookkeeping services throughout the US.