5 Important Small Business Accounting Tips
Are you on top of your business accounts?
When you’re running a small business, you must stay focused on the books. If you’re not managing debt and expenses, you could sink the business rather than grow it. But when you’re not an accountant, you might find the prospect of accounting daunting.
Don’t worry, we can help! Keep reading for these 5 small business accounting tips to get you started.
1. Decide on a Bookkeeper or Accounting Software
It might be tempting to cut costs and be the head of marketing, sales, and accounting yourself. But it might be better to hire a bookkeeper or other types of accountants. Accounting services help keep your books in shape and avoid costly errors.
It’s useful to have someone with a deeper understanding for some accounting help. You could hire a freelancer or someone on a part-time basis to start. But this might not be enough as your business grows.
Another option is to make use of finance and accounting software like Finvisor. You can either familiarize yourself with the software, or a hired bookkeeper could put it to good use.
2. Keep Accounts Receivable Apart From Borrowed Funds
The importance of accounting starts with keeping your funds separate. Most small business owners need loans or backing of some kind when starting up.
But you don’t want those loans showing up in your receivables. Accounting software helps to separate your income from your borrowed funds. This way, you know what’s yours and what you need to pay back.
3. Don’t Let Clients Skip Out of Settling Balances
If you see a large amount in receivables, that’s a good thing but that money isn’t yours until it’s in the bank. Don’t let clients get away with not making their balance payments on time.
Stick to your guns and insist that you need the payment for past orders before you’ll accept another one. Getting the money you’re owed is vital for staying afloat and not folding the business.
Because of this, you should consider improving your invoices. You should also consider using invoicing and billing software. You can track payments and know who to chase and when to chase them.
4. Record Daily Expenses and Make a Budget
It’s a good tip for small business owners to keep records of their daily business expenses. Don’t work on a two-week schedule for the sake of payroll, break it down by day and then week.
This will help you get an idea of where your money goes and what your priorities are. You’ll also get a better idea of how much you need to function, which help you create a budget going forward.
5. Work Out a Basic Monthly Profit
The numbers get complicated fast when working out how much you need to keep a small business running. With tip 4 you’ll find out your running costs. This will then tell you what you need to make each month to cover all your costs.
Income is the easiest part to work out, so set yourself a strict target that you need to earn. Without being specific and meticulous, your numbers will spiral and become a mess. If you don’t get on top of that, your business could suffer and you might end up in deep trouble.
Small Business Accounting Tips Made Easy
So, there you have it! Now you have these small business accounting tips you can get started.
The first few years are crucial for small businesses. You stand a better chance of success with good accounting so set yourself up right. Accounting software is a must, and it’s also worth hiring a bookkeeper. Be detailed, keep track of everything, and set yourself a budget goal.
If you found this article helpful, check out our other blog posts for more business advice!