Running a successful cleaning business requires more than just a great cleaning service, it also requires strong financial management, and smart professional bookkeeping to help your business remain profitable, efficient, and prepared for growth. At Mackenzie Group, our cleaning business clients are well looked after by our team of professional bookkeepers, helping them stay on top of their finances while they focus on providing top-tier cleaning services.
Why Bookkeeping Matters for Cleaning Businesses
Cleaning businesses often operate on tight margins and rely heavily on a positive cash flow. Without proper financial tracking, it’s easy to underprice services or struggle with payroll. A well-organized bookkeeping system can help you:
- Track income and expenses accurately
- Monitor cash flow and prevent shortages
- Maintain compliance with tax obligations
- Identify areas to cut costs and increase profitability
- Improve your ability to make decisions
Bookkeeping Tips for Cleaning Businesses of any size
1. Separate Personal and Business Finances
One of the biggest mistakes small business owners make is mixing personal and business finances. Open a dedicated business bank account and savings account to ensure accurate tracking of income and expenses. This can also reduce the time burden in tracking the expense of your business and reduce your accounting and bookkeeping bills as there is less for them to look through.
2. Track Every Expense
From cleaning supplies and linen to fuel costs, every business expense should be recorded. Categorizing expenses properly will make tax deductions easier and provide insights into where you can cut costs. When recording their expenses it’s important to include the receipt or invoice, this helps you remain compliant.
3. Invoice Promptly and Follow Up on Payments
Late payments can create cash flow problems. Implement an efficient invoicing system with clear payment terms with multiple payment methods. Consider using accounting software that sends automated payment reminders to clients or even a direct debit system to ensure you never have invoices overdue.
4. Monitor Cash Flow Regularly
A cleaning business often has fluctuating income, especially if clients pay on different schedules. Keep an eye on your cash flow to ensure you can cover payroll, supplies, and other operational costs.
5. Leverage Tax Deductions
Many expenses in a cleaning business are tax-deductible, including vehicle expenses, cleaning supplies, uniforms, and insurance. A bookkeeper can help you maximize these deductions and reduce tax liability while ensuring you aren’t claiming something that is not deductible.
6. Set Aside Money for Taxes
Taxes can be a major financial burden if not planned for properly and can close successful businesses overnight. Set aside a percentage of your income in a separate account to cover tax payments, superannuation and GST, avoiding last-minute financial stress as well as emails and phone calls from the ATO.
7. Use Bookkeeping Software
Bookkeeping software like Xero can simplify financial management by automating invoicing, expense tracking, financial reporting and even budgeting. By also implementing a job management system like ServiceM8 you will ensure no job is ever missed, jobs are profitable and every job is invoiced.
8. Review Financial Reports Regularly
Monthly financial reports provide valuable insights into your business’s health. Analyzing profit margins, revenue trends, and expenses helps with making informed business decisions, whether that is to hire, advertise more or to cut unprofitable clients.
Partner with a Professional Bookkeeping Firm
Keeping up with bookkeeping while managing day-to-day operations can be overwhelming and things can get missed. At Mackenzie Group, we specialize in bookkeeping for small businesses including cleaning businesses, providing accurate financial tracking, tax preparation, and cash flow management.
Let us handle your finances so you can focus on growing your cleaning business. Contact us today for a free video call to see if you are on the right track in your cleaning business.