5 Accounting Tips Every Small Business Owner Should Know
According to the Bureau of Labor Statistics, 20% of small businesses don’t make it past their first year. Managing finances properly is crucial to the success of a small business.
If you’re a small business owner who needs some help with their accounting practices, you’re in the right place! Keep reading to learn five accounting tips every small business owner should know.
1. Keep Business and Personal Expenses Separate
One of the most important things a small business owner can do early on is open a business bank One of the most important things a small business owner can do early on is open a business bank account and never use their personal account for their business again. By separating expenses, it makes it easier to track and reconcile business expenses as well as income. Not only that, there are many other benefits of a business account.
You can benefit from personal liability protection when funds are separated. If you’re looking to increase the ways customers can pay for your product or services, the best ach processing companies often require you to have a business account to do so. Lastly, there is the added benefit of the business being able using a line of credit if needed.
2. Get Bookkeeping Software
Whether you’re planning to do your bookkeeping in-house or through professional accounting services, you need good bookkeeping software. There are a lot of options on the market, so take your time to sift through and find user-friendly software that works for your business.
Once you choose software, it’s important to set it up correctly. Once it’s tailored to your business, it’ll make managing finances and everyday tasks easy.
3. Budget and Forecast
As a small business owner, you need to know how to run and interpret financial statements from your bookkeeping software. After reviewing your financial statements you have the information needed to prepare a budget.
Preparing a budget quarterly will help you identify and resolve problems quickly. Without a budget, it’s hard for business owners to recognize a problem until it becomes a cash flow issue.
4. Keep Your Receipts
Keeping receipts may sound old-school. Bookkeeping software doesn’t rely on them to identify transactions, but the IRS does require receipts for any tax deductions.
You can create a file system where you keep receipts for each vendor you work with. Another method of keeping receipts is scanning them. Then you can attach an electronic copy to the transaction in your bookkeeping system. Most bookkeeping software includes this feature for free.
5. Seek Professional Guidance
You need to decide early on how you want to handle finances for the business. Many small business owners try to do the bookkeeping and accounting for their business. Doing so detracts their time and attention from core work.
Beyond help with your taxes, there may be other times in your business journey when you need expert guidance. If you find you need help with your growth strategy or maximizing profits, think about using a service like Fractional CFO. You get the benefit of the financial expertise of a CFO without hiring full-time.
Use These Accounting Tips For Your Small Business
Now that you’ve learned about these five accounting tips, are you ready to put them into practice at your small business? From keeping receipts to creating a budget, using these tips will help your company grow.
If you’re interested in reading more articles like this, check out the rest of our blog!