Small business grants offer young companies funding if certain requirements are met. According to the Small Business Association, the federal government does not provide grants for starting or expanding a business, but individual state grants may be available to help stimulate economic development. The grant process often involves lengthy applications, along with the submission of current and projected financial data. To maximize the chance of success, small businesses should ensure their bookkeeping system is reliable and accurate before they begin filling out grant forms. Here are five bookkeeping tips to help companies preparing to apply for grants or other financial assistance.
Track Employees and Assets
To be eligible for government grants, a small business must meet size requirements set by the SBA. Non-government organizations may also make similar cutoffs in employee count or asset size when determining which companies qualify as small businesses. These statistics can be sourced from accounting records, so it’s important for small companies to keep payroll and balance sheet information up to date.
Separate Personal and Business Expenses
Many small businesses mix personal expenses with company cash outlays, especially in early years, when operations are small. Grant applications aim to capture a picture of the company as a stand-alone entity. Tracking business expenses separately is vitally important to ensure that amounts reported are accurate and portray the true financial position of the company.
Compile Basic Financial Statements
Even if recent financial statements aren’t a required attachment for every grant application, some financial statement data is likely to be requested. Companies using accounting software can produce financials in the proper format at the touch of a button. This time savings allows management to focus on other sections of the grant application and ensure everything is filled out completely.
Formulate a Detailed Financial Plan
Many grants allot money for specific projects, such as energy-saving upgrades. To properly complete a project-oriented grant application, a company’s accounting records need to be detailed enough to pull out certain expenses and forecast cost of the project based on future volume. Accounting software with customizable report options allows management to manipulate reports and produce specific data quickly.
Avoid Computational Mistakes at All Costs
Turning in a grant application with math errors looks unprofessional. With so many companies vying for funding, one minor mistake can cause an automatic rejection. Accounting software helps avoid computational errors and improves the overall accuracy of financial reporting. Even with software, data provided should be reviewed by someone other than the preparer before the application is submitted, to double check for reasonableness.
Small business grants and low-interest funding allow companies to obtain funding and make improvements to their business. Solid bookkeeping streamlines the application process and improves a company’s chance of receiving available grant money.