Every small business needs to keep a track of the finances which includes their income, expenses, profit, and taxes.
However, understanding all of these numbers can be very confusing. And this is exactly where calculators and tools come in.
These financial calculators and tools offer accurate insights at every stage and so, irrespective of whether you are planning for business growth or simply trying to manage daily financial operations, using the right tools makes a big difference.
To help you understand the tools better, in this blog, we will be exploring some of the most essential business accounting tools to help you get started.
Table of Contents
Why Financial Calculators Matter
Financial calculators are one of the most important tools today that help businesses make quick and informed decisions.
These calculators are basically smart tools that do the complete math for you. In simple words, instead of doing the math on your own, these calculators offer the best and fast insights about your business’s financial health with the most accuracy. These tools primarily help you understand how much tax you may owe and how much profit you are making, which in turn saves you a lot of time while also reducing a number of mistakes that you may tend to make while calculating manually.
Profit Margin vs. Markup
It is indeed a fact that a lot of people today get confused between the terms – profit margin and markup. To help you understand better, remember that profit margin is basically how much profit you make for a sale. On the other hand, markup is generally how much money you add to your overall cost in order to make a decent profit.
Remember that, knowing the difference between the two helps you understand and price your products better in the ever-evolving price-sensitive market!
Using a Profit Margin Calculator
In line with the profit margin, a profit margin calculator ideally shows how much profit you are or your business is actually making with absolute ease.
For instance, if you sell something for $200 and your overall cost is $80 then your profit is $120. Therefore, you get a profit margin of $120. Now, in order to use a profit margin calculator, all you have to do is enter the selling price and overall cost in the making and the calculator will quickly tell you the margin. This not only helps you save a lot of time over calculating huge numbers but also gives you an understanding of whether you are making enough profit or the other way round.
Markup Calculator
Sometimes, you want to add a fair markup to cover your costs and still earn a profit. In such cases, a markup calculator will help you do just that. For instance, If the cost of something you sell is about $50 and you want a fair 30% markup, then the calculator will tell you to price it at $65. That way, you not only stay competitive but also earn at the same time. This is helpful when you are in a price-sensitive market.
COGS Calculator
Besides the profit margin calculator and the markup calculator, there is also a COGS calculator which stands for Cost of Goods Sold. Now this calculator includes everything it takes to produce or buy the item that you are selling. Basically, the COGS calculator helps you understand your total cost through the process.
EBITDA Calculator
EBITDA calculator on the other hand stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It basically shows your business’s core profit before showing the extra costs. This calculator helps you understand how your business is doing at its core. An EBITDA calculator lets you input your earnings and expenses and gives you a clear result.
How These Tools Help You Plan for Growth
It is indeed a fact that when you know your numbers better, you can grow your business better. And this is exactly how financial calculators as tools can help you plan for your growth as they show what is working the best for you and what needs to be changed. This in fact not only helps you save time over doing the math but also helps you understand your numbers better!
Mistakes to Avoid
If used incorrectly, even the easiest tools can lead to mistakes. And therefore, one of the most common mistakes to avoid is that of entering the wrong digits. Another mistake could be entering markup instead of margin which can in turn lead to underpricing.
This is exactly why it helps to have the right guidance while using the calculator tools.
Orbit’s Online Tools
Orbit Accountants offers online calculator tools carefully made for businesses in Canada and the US which include the EBITDA, COGS tools, profit margin calculators, and markup calculators.
You don’t have to be an expert in math to use these calculators. All you have to do is enter your digits and the tool will give you the answers. And the best part? These tools are part of Orbit Accountant’s commitment to offering easy bookkeeping services for all kinds of businesses.
How Orbit Accountants Helps You Turn Numbers Into Strategy
Using calculators to understand your business’s numbers is indeed a good start. But having a dedicated team by your side is an even better option. The team at Orbit Accountants is here to guide you at every step of the way turning your business’s numbers into strategy. In fact, they will not only help you understand your results in detail but also turn them into a practical plan taking your business forward. So whether it is about pricing your products correctly or planning your tax filings, the team will always be by your side.
In essence, financial calculators may seem like simple tools but can make a huge difference. They not only help you understand the overall costs and set the right prices but also help you grow your business with the utmost confidence. When used with guidance from experts like Orbit Accountants, you get the best results and make the right decisions.
