Small Business Accounting
Top Tips for Your Business
One of the areas that most business owners seem to dread and put off until they can no longer ignore it, is accounting. Most times this area is only touched upon once a year, at tax time. There are many instances when business owners just do not understand the accounting of their business. With the tax season quickly coming to an end, I have put together a list of top tips when it comes to small business accounting. Regardless of how the accounting was done for your business last year, with these tips you can right the ship for your business this year.
Do I need to keep my business financials separate from my personal financials?
It is imperative to keep the two separate for a few reasons:
Keeping them separate allows you to be able to keep accurate accounting books for your business.
You are able to tell relatively easily if your business is making a profit.
Your taxes are that much easier to complete with accurate business books.
Do I need accounting software to keep my business books?
It depends on what your plans are for your business. When you first start, you may be able to get away with a simple Excel sheet as a tracking mechanism. However, most business owners want to grow their business. In order to do so with relative ease and accurate record-keeping, it is best to use accounting software.
Do I need to keep my receipts for my business expenses?
Yes but you do not need to keep paper copies. With technology, you can scan or take a picture of your receipt and store it on your phone or laptop. Utilizing Dropbox or Evernote, both free, is an easy way to store your receipts and also categorize/date the files.
Should I invoice my customer even if I don’t have accounting software?
Yes, invoices can easily be created using other software such as Word. An invoice is proof of a transaction, enables collection efforts and keeps your business books accurate.
Should I be tracking the accounting of my business more than just at tax time?
Yes, you should never leave the accounting in your business to once a year. If you don’t know what your accounting books are made of then you don’t know if you are losing money, where you should cut expenses or how to grow your business.
How do I keep track of my inventory?
The best way to keep track on your inventory is to have an accounting software that will do the legwork for you. If you choose to use Excel, then make sure to record all transactions pertaining to your inventory that includes dates, amounts and item description. Not only would you be recording when you receive inventory but also when you sell it and what you sold it for.
Do I need a professional accountant other than at tax time?
Yes, a professional accountant can help you with the following:
Help you set up your business books
Help you decide if a software will be used and which one
Help you understand how you can make your business grow
Prepare your books so that you are spending less time and money with a tax accountant
Help in many areas such as: