How Do I Manage Accounting for a Printing Business?
Running a printing business isn’t just about good printing. You also need to manage your money properly. It might not be the fun part, but it matters.
Good accounting helps you:
Track your income and expenses
See which services make the most money
Set the right prices
Manage inventory better
Without this, it’s easy to lose control of your finances.
Here are some simple tips to help you stay on top of the money side—without making it confusing.
Get professional help: Partnering with a CPA for growth
As your printing business scales, the financial complexities can quickly become overwhelming. Unless you possess a strong accounting background yourself, bringing a Certified Public Accountant (CPA) on board becomes essential. Here's why a CPA is the perfect partner for your growing business:
Unmatched tax expertise: Tax laws are intricate and constantly evolving. A CPA, having passed rigorous exams and undergone ongoing education, possesses a deep understanding of tax regulations specific to the printing industry. This expertise ensures you navigate tax season with confidence, maximizing deductions and credits to minimize your tax burden.
Compliance confidence: Beyond tax filing, a CPA can ensure your business adheres to all relevant tax regulations. This includes payroll taxes, sales taxes (if applicable), and any other industry-specific reporting requirements. By staying compliant, you avoid penalties and fines, protecting your business from unnecessary risks.
Strategic financial guidance: A CPA is more than just a tax preparer. They are your financial advisor. By analyzing your financial data, they can identify trends and uncover areas for improvement. This can lead to cost-saving strategies, optimized pricing models, and informed inventory management decisions that boost your profitability.
Cash vs. Accrual
Here's a breakdown of two common accounting methods: cash accounting and accrual accounting, helping you understand which one best suits your growing business.
Cash accounting means you record money only when it changes hands. You note income when you get paid. You record expenses when you pay a bill. That’s it.
It’s simple and works well for small or new printing businesses. Think of it like tracking your own spending in a notebook.
Here’s how it works:
Income: You record a sale only when the customer pays—by cash, card, or check.
Expenses: You record a cost only when you actually pay—like for paper, ink, rent, or equipment.
Benefits of Cash Accounting
Simple to use: You don’t need to be an expert. It’s easy to track, especially for small businesses.
Clear cash flow: You always know how much money is coming in and going out. No guessing.
Drawbacks of Cash Accounting
Not the full picture: It doesn’t track unpaid bills or invoices. This can make your finances look better—or worse—than they really are. For printing businesses with seasonal work, this can be misleading. For example, if you get a big order in December but the payment comes in January, it looks like December was slow—even if it wasn’t.
Hard to track profit: You only see money that’s moved, not money you earned or owe. That makes it tough to measure real profit at any given time.
Accrual Accounting: A Full Financial Picture
Accrual accounting gives a more complete view of your business. You record income when it’s earned—even if you haven’t been paid yet. You also record expenses when they happen—even if you haven’t paid the bill.
Think of it like a snapshot of everything your business is earning and spending, not just what’s in your bank account.
Here’s how it works for a printing business:
Income: You record a sale when the customer places an order. If they haven’t paid yet, you log it as “accounts receivable”—money you’re owed.
Expenses: You record a cost when you get the invoice, not when you pay. This becomes “accounts payable”—money you owe.
For efficient management of accounts payable, consider outsourcing to reputable companies with experience in the printing industry. These specialists can streamline your workflow using accounts payable services.
Benefits of Accrual Accounting
More accurate view: It shows a full picture of your finances, not just cash on hand. This helps you make better decisions—especially if your printing business has busy and slow seasons. For example, you can track holiday sales even if customers haven’t paid yet.
Better profit tracking: You count all income and expenses—whether paid or not. That makes it easier to see your real profit.
Drawbacks of Accrual Accounting
More complex: It takes more effort to manage. You may need extra software or help from a professional bookkeeper.
Choosing the right method for your printing business
Which Accounting Method Is Right for Your Printing Business?
The best method depends on your business size, how you operate, and how complex your finances are.
For smaller businesses: If you have steady income and regular expenses, cash accounting might be enough—especially when starting out. It’s simple and easy to manage.
As you grow: If your income becomes seasonal or more complex, accrual accounting is usually better. It gives you a clearer view of your finances and helps with long-term planning.
Invest in bookkeeping
Implement a robust bookkeeping service to track your day-to-day finances accurately. Start with software like QuickBooks or consider outsourcing to services like BookkeeperLive for larger operations. Digital solutions streamline the process and provide better insights into your business's financial status.
Establish routine
Just like your consistent printing processes, develop routines for your accounting. This might involve weekly bill payments, check deposits, and monthly expense tracking. Put these routines in writing and display them prominently.
Remember, consistency is key! Especially with tasks like filing sales tax and payroll withholdings. Late reports can result in penalties.
Stay informed.
Keep a watchful eye on your key financial metrics: sales, costs, accounts payable, and accounts receivable. A weak system for collecting receivables can put your business at risk. Regularly monitor your bank accounts and credit cards.
Don't wait until year-end to crunch the numbers. Proactive financial analysis allows you to identify and address potential problems early on. Regularly review your financials and seek guidance from your CPA. The deeper you understand your finances, the better equipped you are to steer your business towards success.
Automation: Streamline your workflow
The good news? Many accounting tasks can be automated in your printing business! Here are some:
Invoicing: Invest in software that automatically generates invoices based on job details. This saves time, reduces errors, and ensures timely customer billing.
Bill pay: Automate recurring bill payments to avoid late fees and ensure vendors are paid on time.
Expense tracking: Integrate your expense tracking software with your credit cards and bank accounts for automatic data entry. This eliminates manual data entry and streamlines expense categorization.
By automating these tasks, you free up valuable time and resources for core business activities. Plus, automation minimizes errors, leading to more accurate financial records.
Track profitability for print jobs
It's crucial to track the profitability of each print job. This helps you identify your most lucrative offerings and pinpoint areas for improvement. Here's how:
Job costing: Track all costs associated with a print job, including materials, labor, and overhead. This allows you to calculate the true cost per job.
Pricing analysis: Compare your job costs to your selling prices. Are you adequately covering your expenses and generating a profit?
Profit margin optimization: Use profitability insights to adjust pricing strategies. You might identify opportunities to raise prices on under-valued jobs or explore cost-saving measures for less profitable ones.
By tracking profitability, you gain valuable insights to optimize your pricing and boost your overall bottom line.
Don't wait until the last minute
Don't leave financial tasks for the end. Start early to keep things clear and organized. Instead of waiting until deadlines approach, make it a habit to check your finances every month. Also, ask for advice from experts, like a financial advisor. Understanding your money better helps you make smart choices for your printing business.
Bottom line
BookkeeperLive can help your printing business by providing a robust bookkeeping service that tracks your day-to-day finances accurately. This will give you a clearer picture of your financial health and help you with long-term planning. BookkeeperLive can also automate many accounting tasks, such as invoicing, bill pay, and expense tracking. This will save you time and resources, and help to minimize errors in your financial records. By using BookkeeperLive, you can gain valuable insights into your business's profitability and make better decisions about your pricing and inventory.
FAQs
1. How can I improve my cash flow in my printing business?
Implement stricter credit policies to reduce outstanding invoices.
Offer early payment discounts to incentivize faster payments.
Track inventory closely to avoid overstocking and wasted materials.
Negotiate better payment terms with suppliers if possible.
. 2. What are some security measures I should take for my printing business finances?
Use strong passwords and regularly update them.
Restrict access to financial data only to authorized personnel.
Invest in anti-virus and anti-malware software.
Regularly back up your financial data securely.
3. How can I stay up-to-date on accounting regulations for printing busness?
To stay informed, Consult with a CPA who specializes in the printing industry industry and subscribe to industry newsletters or publications for updates.
What's Bookkeeper?
BookkeeperLive provides affordable bookkeeping and accounting services tailored to your business goals.
