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Bookkeeping Best Practices for Franchise Business Owners

Franchise business bookkeeping

Franchise companies excel at providing franchisees with operations manuals and marketing materials. But many franchisees are on their own when it comes to bookkeeping and accounting systems. It’s a common blind spot in franchise company operations. Franchisors just don’t provide franchisees with enough resources, know-how and support for bookkeeping operations. 

Franchise businesses have some additional considerations other businesses don’t always have to face. For example, a franchise business starts out with a significant franchise rights payment just to get started, and must continue ongoing franchise fees. Franchise rights are an asset, but the fees required to maintain them are a liability, and contribute to your business’s overhead. 

Franchise Accounting Best Practices

Accounting for franchise fees

Most franchises require an up-front fee, as well as ongoing franchise fees. Generally, the up-front fee is treated as a sale of intangible personal property, and has to be amortized over time as a capital expense. 

Taxability of franchise fees. 

Supplies of intangible personal property, such as franchise rights, are generally taxable. If the franchisor is a GST/HST registrant, the franchisor is required to charge and collect GST/HST on the franchise fee. Where the franchisee is required to include in its franchise fee a percentage of its revenue earned through making exempt supplies of financial services, it is still required to pay GST/HST on the entire franchise fee payable to the franchisor.

Franchise businesses often need to do a lot of volume to break even, especially since many franchise business models rely on economies of scale providing a competitive pricing advantage. These may be low-margin businesses, so maintaining a tight control of cash flow is crucial for success. 

Franchises can usually benefit from careful attention to creating tools and dashboards for monitoring KPIs, or key performance indicators. 

How LedgersOnline can help franchise business owners

Below are just a few ways how LedgersOnline can benefit your franchise business and help you run it even better:

Access to an Experienced Bookkeeping Professional

Many small business owners are bookkeeping novices. They are experts in their own chosen trades and professions, but usually know very little about tax compliance, generally accepted accounting practices (GAAP), LIFO vs. FIFO accounting and properly categorizing expenses. 

By working with an experienced bookkeeping professional, small businesses have a fighting chance to get their books in order and keep them in order. This is important when it comes time to sell the business, because business buyers will discount their offers heavily if the books are not in good shape. 

A good set of books also helps immeasurably with tax compliance, and helps accountants identify tax strategies that can help you improve cash flow and profitability. 

When your bookkeeping is set up properly to begin with, it can also help reduce your accounting fees, too, since accountants have to spend much less time deciphering your books. 

LedgersOnline can also help by providing timely reports on KPIs and other important reports to executives, so they can make sound and timely decisions. 

Organizing your Files Easily with LedgerDocs

If you have never run your own business before, it’s easy to become overwhelmed with the amount of paperwork that you are required to keep track of. After experiencing this issue ourselves, we built an online document management software called LedgerDocs.

LedgerDocs can safely store your financial documents online for you with ease and eliminate a lot of excess paper. More time in the day gives you and your core team additional breathing room to developing strategies to grow your franchise.

LedgerDocs makes it a snap to upload these critical documents to the Cloud in seconds, so that all your documents are where you can find them, when you need them. LedgerDocs also enables collaboration between the business, bookkeeper, and accountant with anywhere, anytime access to your live financial data. 

There are several ways to easily send your financial documents securely to the cloud via LedgerDocs:

  • Drag and drop to upload documents that are already electronic and on your computer using any web browser (Chrome, Safari, Internet Explorer, and Firefox)
  • Scan paper documents and upload them directly to LedgerDocs in one step, or
  • Use our iPhone or Android app to take a picture of a receipt and upload with a few touches on your smartphone
  • Once your documents have been uploaded, our bookkeepers can begin working on your franchise bookkeeping right away

Free Up Hours of Time

Working with LedgersOnline relieves franchise business owners of the requirement to spend hours with their nose in a computer screen, manually inputting transactions, categorizing them, learning how to operate bookkeeping software and managing software updates. With LedgersOnline and LedgerDocs, business owners are able to free up hours of time each week from doing routine bookkeeping functions. So you and your team are able to focus on taking care of clients and customers, improving your product offering, sales, marketing and leading your team. 

Reduce stress

Failing to back up and organize documents can cost you both time and money, not to mention the worry and headache that goes with it.

Not only does the LedgersOnline bookkeeping service provides you with all the tools necessary to store and manage your files, it makes the process of keeping proper accounting records a simpler task. Removing that related source of daily frustration is a benefit that many people think isn’t possible, but once you’ve tried automating your bookkeeping, you will wonder why it took you this long to remove it.

Access your financial data anytime, anywhere

You can enable collaboration between business, bookkeeper, and accountant with anywhere, anytime access to your live financial data. Hosting your franchise’s accounting data with LedgersOnline allows for users to access accounting and bookkeeping data in real-time, regardless of location.

The bottom line: It’s never been better for a franchise owner to improve returns on their bookkeeping work. But with the right team and technology in place, business owners can reclaim lost time and devote more energy to their ROI and business management.

 

Contact us to see how our Bookkeeping Services for Small Businesses can help to streamline your financial processes and give you more time to focus on growing your franchise business.

Posted in Blogs, bookkeeping