7 Small Business Accounting Tips
Looking for small business accounting tips that can help you save money and prepare for tax season? We’ve got you covered! Accounting is one of the most important areas of your business. Accurate bookkeeping helps you gain a full understanding of how your business is doing and where to go next. Simply put, the 7 small business accounting tips are:
- Make correct accounting a top priority
- Use accounting software
- Learn how to invoice
- Open a business bank account
- Set money aside for emergencies
- Analyze costs of doing business
- Hire an accountant
Make correct accounting a top priority
One of the most vital small business accounting tips is to stay on top of your accounting. That means you need to make it a priority from the get-go. Keep up with receipts, paperwork, invoices, donations, and any other money you receive. Whether you hire an accountant or not, this will help you have a clear financial picture of your company and help you come tax season.
Not only that but not having your information up-to-date can prevent you from growth and acquiring potential clients. It’s not just about keeping track of expenses, but understanding how much cash flow is in your business and how much growth you are experiencing. Small business accounting tips like this are critical when first starting a business. Essentially, doing this early on and repeatedly will help you make the transition easier for whatever your business is facing. Examine your biggest and smallest expenses. Don’t delay on gathering information for tax season. Also, updating your records often will help you know exactly how much cash flow you have. It will also help you make purchase decisions for big-ticket items.
Use accounting software
Whether you are a new small business or have been active for several years, accounting software can help you in many ways. First, it can automate the process of accounting for you. If you choose the right accounting software it can help track online payments and in-store payments. Second, you can keep track of all expenses and invoices. You have all transactions located in one place. Third, some accounting software will provide financial reports to track growth and how well you are doing. Fourth, you can have remote access to your financial records even while away. So, even if you step away for a while you can still keep track. You don’t want to ignore this small business accounting tip. It can help you pinpoint your weaknesses and strengths.
Learn how to invoice
Learning to make an invoice properly is one of the first steps to establishing credibility as a small business. Not only is it a great way to track expenses, but you are establishing a paper trail should someone refuse to pay. When it comes to legal matters, this is always great to showcase that you are following the law. In addition, invoicing companies helps you stay on top of bills paid and who owes what to your company. If you have on-going accounts, it is critical that you invoice them every month. Detail how much they owe, their balance, and what has been previously paid.
Open a business bank account
Another way to stay on top of your accounting and a great small business accounting tip is to keep your personal and business accounts separate. Essentially, open separate checking, savings, credit card, and other accounts for your business. This will shield you from tax repercussions as you won’t purchase any personal items on your business accounts and vice versa. A business credit card also comes with different benefits and rates of credit. Take advantage of those by getting cashback whenever you purchase items or accruing points and other ways. This can help you make payments on select items or maximize your dollar, letting you make money back on select purchases.
Set money aside for emergencies
Life is going to hit you at some point. Having a safety net is a necessary small business lifeline that can prevent real damage from being done. This may come in the form of multiple lines of credit with your bank or having cash stored away on hand. Small businesses, however, need to run a lean operation in order to stay afloat their first couple of years. Saving even a small amount can help you in a time of crisis.
Don’t let this small business accounting tip slip by. It can prevent a major disaster from tanking your business.
Analyze costs of doing business
To get a full financial picture of how your small business is doing, you need to know the actual cost of doing business. Track your spending on a daily, weekly, and monthly basis. Try to find areas in which you can cut costs or cut services that are actually costing you money. Small business accounting tips like these may seem simple, but they can have a huge effect on the way you think about overhead and employee pay.
Hire an accountant
Last, but certainly not least, one of the most important things you can do for your accounting is to hire an accountant. You don’t have to hire someone full-time. In fact, It is probably best that you do not. Instead, hire an accounting firm that can come in periodically and update your bookkeeping and accounting needs. They can help you map out financial projections, financial growth, and the status of your business.
They will also help you pinpoint weaknesses and areas for improvement. An accountant can simplify tax season and get your documents in order, or they can file on your behalf. This may be the best option for most small businesses as you can maximize your deductions and keep money in your pocket.
Are you looking for an accountant that can help your small business with its accounting? Look no further than Sheffield, Trackwell, and Rapp. We are a licensed accounting firm dedicated to helping businesses get the most out of their bookkeeping and taxes. Contact us today and see how we can help you.
