Successfully operating a franchise requires more than complying with all the business terms stipulated by the franchiser. Keeping your franchise’s finances balanced and in good order is also a vital aspect of successfully operating your franchise business, and enaging a professional accounting service in Malaysia from a Malaysia accounting company is an option many entrepreneurs turn to, to take care of all legal requirements related to annual compliance in financial matters. The following five accounting and bookkeeping tips will help you avoid financial missteps to maintain the perfect balance in your franchise’s books. But when in doubt, do not hesitate to contact VentureHaven for a free consultation.
Malaysia Accounting Company
Operate Within Pre-defined Budget
Ongoing expenditures, such as franchise fee, royalty, salaries, marketing and advertising fees, utilities and others, must be allocated based on what’s been discussed, strategised and pre-planned to help manage cash flow and avoid capital deficit. Also, provisions must also be made for unexpected expenditures. It is important to note that the initial fee paid to the franchisor for using the equipment, trademarks and such, should be included as an intangible asset on the balance sheet, so when this fee is deducted from the tax return, it can be itemised as a depreciated intangible asset. A Malaysia accounting company can help with the depreciation of regular franchise fee and the initial fee, if required.
Monitor Cash Flow
All bank accounts are to be reconciled to make sure all transactions are recorded accurately, and no mismatch of financial data is detected while comparing bank statements with financial statements. Also, flow of incoming and outgoing capital must be controlled to stay within the limit of the monthly budget. As poor cash management leads to cash flow shortages, a terrible mistake to make would be to make financial decisions based on what the current bank account balance shows, as the balance does not reveal what amounts might be on their way in or out of the company.
Franchise costs, such as advertising, franchise fee and salaries, usually require financing, and should business loans be incurred, they need to be managed efficiently along with the other ongoing expenses. Ways to manage loans include refinancing with a lower interest rate and boosting sales to pay off the debt instalments without incurring late fee penalties.
Adopt Advanced Technology
Current accounting softwares have many automated functions to save time while reducing the burden of manual data entry. From invoicing to payroll management, these softwares can be customised to do all types of bookkeeping work to suit specific business needs. Cloud-based digital tools and solutions can even mitigate the risk of loss of data or breach of classified information to further “foolproof” the bookkeeping process. Both franchisee and franchisor can also access real-time data of the financial health of the business, when necessary, anywhere, anytime, with a high level of transparency.
And last but not least …
File Error-free Tax Returns
With franchise fee, royalty and training fee to be taken into account, the tax filing process of a franchise operation may require extra attention and expertise. Also, franchises need to factor in Sales and Service Tax where making payment to the franchiser is concerned, along with many other items that need to be accounted for when filing taxes to avoid penalties imposed by the authorities. Also, franchises must not miss out on the tax deductions that they can rightfully claim for various expenses. A professional accounting service in Malaysia is invaluable in these respects.