Every transaction you do needs to be recorded; from doing payroll to receiving company investments. This is absolutely crucial a because this keeps your finances organized which in turn helps you avoid mountains of paperwork once tax season comes.
Doing your own accounting may start off smoothly, however that may not always be the case as your business continues to grow. Other aspects of the company start to pull your attention from the ever continuous task of keeping your accounts balanced. Keep in mind that messy books and inaccurate filing of taxes are both costly and detrimental to the business.
Essential Accounting Tips for small business
Tips to keep business and personal expenses separate
Save yourself from all the headache by opening a bank account dedicated to your business. Unless you want to have a hard time come tax month, do not—by any means—mix in your personal expenses with your business.
On the off chance that business goes south, having a dedicated business account will save your personal account from any debt and legal obligation. If you’re putting in capital from personal assets, make sure to state it clearly for documentation purposes.
Keep a record of all business expenses
All expenses made under the business name needs to be recorded and categorized accordingly. If you pay with cash, keep your receipts. If you use cards, you can take advantage of promos like cashback and rewards programs. Have copies of invoices and and checks stored into an accounting software. Don’t forget to also have a digital copy of your receipts when you’ve made cash transactions. Accounting programs will definitely be a big help when you need to record income and expenses.
Record Income Accurately
Having a clear record of your cash flow helps with monitoring the progress of your business and keeps you in the clear with the IRS. Keep your documents organized by identifying the sources of your income. It’s best to keep clear which came from business and non-business accounts and see which ones are taxable. An accurate record of your income and expenses will be used in your financial statement and in turn prepare you when filing for tax returns.
Get an Accounting Professional
If the stress of keeping your books organized becomes overwhelming, it may be time to consider hiring a bookkeeper or accountant. Remember that progress comes with a bit of struggle and not adapting to the demands of business operations may tie you down. Having a professional lifts off some of that burden and proves to be beneficial to the company. Having an expert with an outside view can open up your business to options that you may never have thought of when you started.
Accountants play a vital role in any business by keeping your records up to date and tracking down income and expenses. They may also provide managerial and financial information proven to be useful in making business decisions.
Consider getting an Accounting Software
The best thing about modern accounting is that all of your transactions and documents can be saved in your computer or on a cloud-based system which lessens clutter. Take advantage of available accounting software being offered to small and medium-sized businesses. QuickBooks by Intuit is just one of the many accounting programs being catered to business owners.
Set a schedule for updating your books
Make time in your calendar to look into your books and keep them balanced. Keep an eye on your financial status and stick to a disciplined schedule to stay prepared by the time tax season comes along. Accounting software come into the picture for this and even save you time by automating your records.
Don’t forget about Labor Costs
One of the biggest cost in doing any business is labor. These are costs like employee wages, benefits, and payroll taxes. Your accounting software can help you out with this as well by calculating payroll for you.
Prepare for major expenses
What are some big expenses that you should expect as a business owner? These can be office equipment, utilities and office supplies, repairs and maintenance, rent, theft, or even emergency situations like national disasters.
Manage Inventory Records
Keeping accurate inventory records aids in administrative functions to ensure efficient operation. This ensures that you meet consumer demands and can track sales trends. Better inventory management saves you time and effort which will then boost productivity within the inventory department.
Follow Up on Invoices and Receivables
Whenever you’ve sent an invoice, make sure that you get paid by circling back with partnered vendors. Once a job has been completed, send an invoice in order for prompt responses from those who owe you money. Proper receivables management prevent overdue payment or non-payment. Make friendly reminders in order to avoid vendors from missing the due date.
Create Financial Projections
Forecasting is important for any business when it comes to making smart business decisions. Even if your business is doing well now, you’d want to make sure it stays positive for the years to come. If you’ve hired a professional, they can help you with financial projections and may predict organizational results from your financial statements.
Small Business Accounting Tips will keep your business competitive
These tips and tricks should allow your business to stay financially healthy, avoid penalties, and keep in line with government requirements. By practicing good asset management, you will be more confident in your ability to run your business properly.
Silicon Harbor Business Services is based in Mount Pleasant, SC. We provide solid, practical advice to small business owners and select individuals. We work with Quickbooks Online, Quickbooks Desktop and Quickbooks Enterprise.
For a complete list of our services, please click here. Reach out to our team of Business Consultants at Silicon Harbor Business Services in Mount Pleasant, SC if you have any questions about online bookkeeping or business consultancy. We’d love to hear from you!