As a small business owner, good bookkeeping is a necessity. If you have well-organized financial records, you will be able to manage debts, deposits, and items given on credit by using invoices recorded. Without proper management of all your business finances, you may end up bankrupt before your investment even expands.
Many of the most successful business owners in the world contribute part of their success to excellent record keeping. To keep moving toward your long-term goals and improve profits, get your small business accounting practices in order with these essential tips:
- Separate Business and Personal Expenses – Having a dedicated business bank account, including checking and a credit card, saves you precious man-hours when it’s time to tally up deductible expenses. It’s tough to do out of the gate, but this small business accounting practice will save you major headaches down the road.
- Track Every Expense – Label and categorize each expense and track your cash flow. Use your business credit cards for all purchases and you won’t end up with a wallet full of paper receipts to sort through. But when cash is your only option, file digital copies of receipts to your accounting software.
- Accurately Record Deposits – Loans, revenue from sales and other cash infusions are easy to lose track of, and that can lead to paying unnecessary income taxes. Be sure to accurately record all deposits!
- Dedicate Time to Update Your Books – Block out weekly time in your calendar to get necessary paperwork in order and avoid letting receipts and invoiced receivables pile up. Make sure to stick to the time you’ve set aside!
- Keep Tabs on Labor Costs – Paying employees, including yourself, may be your largest expense. Take note of overtime, perks, and other benefits you offer to prevent over- or under-paying.
- Expect Major Expenses – Computer upgrades, equipment replacement, and tax deadlines shouldn’t come as a surprise. Larger capital expenses often come up during slower months so plan ahead to avoid a cash crunch.
- Maintain Inventory Records – Avoid misplacing merchandise – or theft – by noting dates purchased, stock numbers, purchase prices, dates sold and sale prices. The more organized, the better.
- Follow Up on Invoices and Receivables – Just because you’ve sent an invoice doesn’t mean you’ll get paid. Avoid overpaying on taxes and hours spent sifting through your revenue account and receivables listing by circling back with vendors who owe you money. Accepting online payments and using cloud-based accounting software can help automate this process for you.
Finance is the backbone of any business, so as you can see, learning good small business accounting practices is a must.
Are you a small business that is looking to outsource your accounting? If you need help managing any aspect of your business’s or nonprofit’s finances, we want to hear from you. Call us at (301) 913-0008 or email email@example.com to make an appointment.