A successful small business requires a lot of hard work and endeavor, but also accurate record keeping. Adhering to the best practices of accounting is one way to ensure that your small business can survive and thrive. To make the most of your cash flow, here are six accounting tips for small businesses. For everything else and to answer all your accounting questions, head to our website.
In this guide, we will detail six accounting tips for small businesses. This will include maintaining your records and simple suggestions like separating your personal and business finances. You could also make it easier by using automated accounting practices. However, the essential steps are working out your budget and making a note of your tax deadlines.
Keep Your Business Records Neat And Accurate
While your personal life may be cluttered and a little messy, your business records should be neat and accurate. Not only does this save time searching for those specific transactions, but it also helps when your documents are in the same place.
They can even be categorized and in date order to make it easier to sort through. This becomes obvious when it comes to your tax deadlines. You really do not want to have to sift through hundreds of records looking for the ones that matter. With all that time saved, you can get on with running your own small business.
Maintain Every One Of Your Business Receipts
You may already be in the habit of saving every receipt that you get yet you do not need every one. Make sure that you keep every business receipt though as you can claim back for those crucial business expenses. That may depend on the type of small business that you have as there are a range of items you can claim for. It may be something as essential as a new computer or something minor like some stamps.
Whatever it is, if you need it for your business then ensure that you keep the receipt. Without it, you may struggle to claim the items back as expenses. Keep the paper copies in a folder and organize them according to what they are for.
You may even want to create a spreadsheet so you can log the receipts as they come in. That could include the amount on the receipt, the date it was received, what it’s for, and any other crucial information. Try to get into the habit of finding other ways of recording your business receipts too. That’s right, keeping a receipt of a receipt just in case.
Separate Your Personal And Business Finances
Accounting can be so much easier when you know which set of finances you are looking at. Something as simple as creating a business bank account can make such a huge difference. Imagine having to sift through all your payments and trying to figure out which were for your small business. Sure, you may have a good idea of the personal items but that sense of distinction between work and everyday life is key.
It can also be incredibly difficult and time consuming to try to find that one business transaction. You know it is in there somewhere yet you may have to go through the rest of your transactions. Having your finances clear and distinct is such a simple way of making your accounting straightforward and organized. Just open a new business account with your bank and use it for all your business accounting.
Consider Automated Accounting Practices
There are various ways of making the process of accounting for your small business a bit easier. From outsourcing the work to someone else or using a digital app to log your income and outgoings. If you struggle with physical bookkeeping then going digital may be easier.
You can also use automated invoicing to make sure that you can keep on top of your invoices. The software should be relatively simple to use and automatically generates those invoices which can then be emailed across or printed out. All the information on that invoice is then automatically fed into the system, saving you time from manually entering the data.
An accounts receivable app can also have reminder notices to remind you of those unpaid invoices. They can even highlight those late fees so you can make sure you get paid faster.
Expenses reports can also be a major drag, especially for that one employee who has to manually enter the data. It should not be that way and an automated account practice can save you time and money. That can be finding specific reports or just coding in recipes or writing those checks. It may even be possible to take pictures of receipts in an app so the data does not have to be manually entered.
Make A Note Of Your Tax Deadlines
There is nothing worse than realizing that you have a big tax deadline coming up and you are wholly unprepared. Sticking to a deadline can be done in several ways so find a method that works for you. That could be marking it in a calendar (either a paper version or online) or setting up reminders in your smartphone. You may even prefer to have a countdown so you have a few days before the deadline to work on what you need to submit.
Make sure that you note down every single tax deadline so you cannot miss a single one. For tax returns, you will need a few days to sort through all your finances and expenses so give yourself the time. Once you have met the deadline and sent on what you need to send, you can rest easy.
Try to research which tax rules apply to your own small business so you are not caught out. Depending on the type of business you have, there could be any number of taxes that you are subjected to. Those tax rates can vary too so it is important to find out what they mean before you become comfortable with all of your tax deadlines.
Budget, Budget, Budget
Alas, not all of that delicious income is actually yours as some of it will have to go to the taxman. That’s pretty much a rule of life and business so make sure that you work that into your budgets. It could be a case of keeping tabs on how much you owe in tax as you go through the tax year. You may even want to set an amount aside as a rough estimate of your tax so you can have it ready and waiting.
Try to put this amount into another account so it is not factored into your business account finances. A big tax bill can come as a huge shock towards the end of the tax year so get prepared early on. By setting some money aside, you can pay off that tax without any real concerns. Finish your tax return on time and everything that is left is for you to enjoy.
It can be stressful running a small business so try to make the accounting that bit easier. You may prefer to keep it in hand instead of outsourcing it so keep it simple. Create a business bank account, keep track of your income and expenses, and mark down tax deadlines.
These are straightforward tips yet they can have a big impact on your accounting if they save you time and money. If anything, you can work on putting that time and money back into your small business.