An SME is what we call a small or medium-sized enterprise, generally defined according to the number of employees, as well as its turnover or total balance sheet.

Just like large companies, SMEs should pay particular attention to accounting and financial management.

The main challenge is that, because these businesses are smaller, financial management is often handled directly by the business owner.

However, this is a mistake that should be avoided. That is why, in today’s article, we explain the key aspects you should consider to keep your company’s accounting properly organised and up to date.

SMEs: Accounting Strategies to Optimise Your Finances

When starting a new business, it is perfectly normal to feel somewhat overwhelmed when it comes to accounting.

Managing finances is, in fact, a responsibility that requires considerable attention, particularly for SMEs that are not yet firmly established in the market.

It is therefore essential to give this area the attention it deserves, as well-organised accounting can have a positive impact on the development and growth of the business.

Below, we have gathered some practical tips that you can implement together with your accountant to improve your company’s financial management.

1 – Indirect Costs and Payroll

When it comes to payroll, some costs are incurred on a monthly basis, while others are considered indirect costs.

These indirect costs are expenses that will arise at a later stage. Examples include the 13th-month payment, holiday allowances, severance payments and other similar expenses.

To keep the company’s finances under control, it is important to plan for these expenses in advance, taking into account the amounts that will need to be paid to employees.

This planning should be carried out in accordance with the Portuguese Labour Code, ensuring that the company complies with its legal obligations. To avoid mistakes, it is advisable to seek guidance from your accountant.

2 – Determine the Selling Price

One of the most important aspects to determine is the selling price of the product or service offered by the SME.

For the price to be both competitive and financially viable for the company, it is necessary to consider factors such as the cost of raw materials, materials and equipment involved in the production process.

Other indirect elements should also be taken into account, including personnel, time and storage costs.

With this in mind, in order for the company to generate profits throughout its activity, it is essential to establish the selling price based on a carefully prepared budget.

3 – Evaluate and Analyse Business Results

Another important accounting tip for SMEs is to know how to analyse their financial results in order to identify direct and indirect costs, as well as the company’s actual financial performance.

This is because not all the money available in the company’s cash at the end of the month can be considered profit.

Regularly monitoring results and understanding the company’s actual profit margin makes it possible to assess profitability, determine liquidity and evaluate its investment capacity.

These are essential factors for the company’s growth and ability to expand.

4 – Understand and Analyse Your Taxes

Tax obligations are often one of the most complex areas that new business owners have to deal with.

However, it is extremely important to understand the tax regime applicable to your business.

This knowledge helps maintain the company’s profitability, avoid unnecessary tax payments and prevent failures to comply with other tax obligations.

A company that keeps its tax obligations up to date is certainly in a stronger position to grow and prosper.

5 – Learn About Business Support and Funding Opportunities

Investment is also an important factor in ensuring the sustainability of a business, whether through its own funds or through credit facilities and financing solutions.

There are several initiatives and support programmes available to small businesses, such as those provided by the Instituto de Apoio às Pequenas e Médias Empresas e à Inovação (IAPMEI).

IAPMEI is a public strategic partner that supports micro, small and medium-sized enterprises in Portugal.

Remember that all these recommendations can be implemented more effectively with the professional support of a certified accountant.