Bookkeeping Basics for your Retail Flower Shop

Bookkeeping..

I recommend using a commercially available PC software package for your accounting. With a little background provided here and some initial guidance from a qualified accountant, you can do your own bookkeeping.

Here are the most basic elements a Profit and Loss Statement

Element Example Includes
Total Sales $50,000 total sales for the period covered by the statement
Cost of Goods Sold -$27,000


What you paid for everything you sold during the period.. This includes freight charges.
Gross Profit $23,000 This is the money you have generated to pay the bills.
Operating Expenses -$20,000


Here is the money you spent to run your shop during the period. It includes: Wages Paid, Rent, Delivery Expenses, Utilities, Advertising, Packaging, Vehicle and equipment depreciation, etc.
Net profit before taxes $3,000 The money you will owe taxes on
Taxes -$1,500 Income tax
Net Profit after taxes $1,500 What is in your bank account to pay debt, reinvest in your business, distribute to share holders, etc.

 

Balance Sheet..

You will also need a Balance Sheet which lists your assets and liabilities. On the Asset side, you have current assets such as cash, inventory and accounts receivable. You have fixed assets such as land, building and fixtures. You also have pre-paid or deferred charges such as insurance or inventory you have paid for but not received. On the Liabilities side, your current liabilities are accounts and wages payable. Your fixed liabilities include your mortgage and bank payments. You will also list here any capital you have invested. It is a requirement that your assets equal your liabilities… hence the name balance sheet

Cash Flow..

Probably the most important parts of your bookkeeping system from a management point of view are sales and cost analysis. These reports are customizable and specific to each business. They are tremendously important as tools for running a profitable business. The profit and loss statement will only tell you the biggest of pictures… you will need these additional reports to help you pinpoint and correct those problems that may be putting your bottom line numbers into the red.

You should investigate and keep records on as many portions of your cash flow as is practical. With experience you may find that some parts of your business are more critical to watch closely than others.

Bookkeeping for a flower shop is no different from bookkeeping for any other small business. Keep in mind that you have perishable and non-perishable products to keep track of. You also have all the other business expenses of labor, rent, insurance, vehicle maintenance and such to take care of. This is where yourbusiness plan cash flow analysis comes in handy… It’s a road map for your bookkeeping. You will choose between doing your own bookkeeping and hiring a bookkeeper. Either way, be sure to install checks and balances in your cash flow system to protect yourself and your business from the disaster of theft and dishonesty.

 

No More House Accounts!..

It used to be that flower shops always had house accounts. They took orders over the phone, sent the flowers, and patiently waited for the customer to pay. Many flower shops still have house accounts. The successful ones are careful about the amount of credit they extend, to whom they extend it. It is extremely important to be diligent about collecting the money owed on house accounts. This requires timely billing… at least monthly. If you feel that to be competitive, you must have house accounts, I would recommend a weekly billing cycle.

That being said, I strongly recommend accepting only cash, check and credit or Debit card payments. Most modern consumers expect to pay for their purchases by credit or debit card. To get your customers to pay with credit cards, rather than putting their purchase on a house account (if you have them), it’s as simple as instructing your clerks to pleasantly say “Thank you for your order, the total comes to $x. Which credit card will you be using today?”

From a cash flow point of view, cold hard cash would be the most desired form of payment. Checks can take a couple of days for your bank to clear and make available for you… plus they sometimes bounce!

Credit cards don’t bounce, but they do have a few little details you should know about. The credit card clearing company you choose will charge you a small percentage for processing the charge and collecting the money. There will also be a transaction fee of a couple of pennies… depending upon how the transaction was entered, and how the card information was verified. Some clearing companies make your funds available as soon as you deposit the credit card transactions for the day. Some have longer waiting periods.

As a small business owner, you are a consumer of banking services… shop around and find the firm or firms who offer the best service and price.

I recommend the Small Business Association for help in setting up the accounting of your business.www.sba.gov