When you are running a small business, you should stay focused on accounting as it is one of the most important tasks in your business. Your business will surely sink before it begins to grow if you don’t manage receivables, debts, and marketing expenses accurately. Okay, before starting accounting tips for small business owners we would like to ask you are you one of those business owners who love poring over spreadsheets? Neither we are. It is true your business’s books are a scorecard of how great you are doing. However, if you are not good with numbers then doing your bookkeeping might sound as satisfying as a surgery. Bookkeeping is one of the tasks no business owner can avoid, no matter how you feel about it.
You may get away with keeping your own books in the starting period of time but as your business begins to grow and tax time approaches, you might feel a little bit lost. Fees for incorrect tax filing or disordered bookkeeping can cause big troubles, not to mention the time you spend in correcting errors. Bookkeeping is an extremely crucial task for all businesses. It helps you manage your plan ahead, prevents an audit by giving the Internal Revenue Service (IRS) what they need, and manages operations.
So if you want to keep moving toward long-term goals and boost up your business’s profitability, follow these proven accounting tips for small business owners.
1. Separate Business and Personal Finance
Do you know what is the most common mistake in small business bookkeeping? Co-mingling expenses and income! It can cause huge headaches in the future for your business. To separate Business and Personal Finance is one of the best accounting tips for small business owners because they need financial backing for marketing campaigns, startup capitals, and so many other initial things in the starting days.
If you don’t want your loans to appear in receivables, open a separate business bank account as soon as you decide to go through with your startup. And don’t forget to use software to make sure your income does not appear in borrowed funds. By doing this, you can be able to separate your accounts plus it helps your business to build its own credit rating.
2. Automate Whatever You Can
Here’s another one of the most essential accounting tips for small business owners; automate whatever you can! This one is really important because automation is a necessity in industries. Software designed for a job can do it faster and better than humans, there is always a big chance of human errors but when you automate your work, your life becomes so much easier. It allows the distribution of both quality and services to be made available at much faster rates and decreases downtime and human error.
Gone are the days when we used to enter data into spreadsheets manually and trying to reconcile all the numbers, it is really old school, isn’t it? Now everyone uses cloud-based accounting software and does their business banking online because they know what is necessary in today’s world. Don’t worry if you don’t have any software for your business, Wrkmash is all here to help you. It is the best cloud-based accounting software designed to take payments, track sales and tackle your bookkeeping. Now you can manage all your business in one place.
3. Keep a Close Eye on Accounts Receivables
Do you know what can dry up your business’s cash flow? Simple, when your customers don’t pay on time. However, it might look good seeing a huge amount in the receivable column but seriously money doesn’t count until it is in your bank account. Do not allow clients to get away without paying regular payments or you will end up having financial problems for your business.
Make sure you stand firm and receive payments for previous orders before allowing them to have more materials. Pay attention when your receivables are due and don’t forget to contact late-paying customers. Set up a payment plan if your customer is having any kind of financial problems, do not let them avoid what you are owed. The receivable department is really important in keeping up your business afloat.
4. Keep Records of Everyday Expenses
According to successful business owners, one of the most essential characteristics of a visionary small business owner is ensuring that all expenses that are incurred in day to day business transactions are well kept and well recorded for future reference. If you calculate expenses for the payroll purpose every week or every day, you can have a better idea of how much money you’ll need to plan a budget for the upcoming week and where finances are each week. This is also one of the most important accounting tips for small business owners to make sure you have all the credit and debit card statements, balance sheets and profit and loss statement. It enables you to build a good financial ground for your business.
5. Monitor Your Employees’ Hours
When you have time tracking software, you are fully able to understand everything that is going on within a business. It will enable a great overview of the whole business for you, how workers are spending their time, and more. This is helpful when it comes to streamlining things, assigning tasks, rearranging projects, etc. It allows employees to clock in and clock out on their smartphones, tablets or computers. It is one of the best accounting tips for small business owners that will surely make your life easier.
We’ve assembled 5 useful bookkeeping and accounting tips for small business owners to keep your business’s finances well and stable every day of operation. You can also get help from Wrkmash, it allows you to build custom invoices tailored to your business. You can manage and create estimates from any device, isn’t it amazing? No more calculator, Know more numbers with Wrkmash the best cloud-based accounting software that meets all your business needs. Click here to start your 14-day free trial.