Accounting Tips for Small Businesses

No matter what size your business is, accounting has to play a part in it. Tracking what is happening with the money involved with your company helps you know what is working and what areas need some improvement.

Below is a list of tips about accounting guidelines for tracking your business’s financial health.

Keep Your Banking Separate

You need to open a company bank account that is completely separated from your personal accounts. Co-mingling of personal and professional funds makes it virtually impossible to see how the economics of each stand individually.

Even if you are operating as a sole proprietorship, you still need accounts that are strictly for work. It’s important for creating financial statements, as well as for tax purposes.

Be Diligent in Your Bookkeeping

You need one place where your expenses and profits are tracked all together. Invest in an accounting or bookkeeping software to provide this. The software will automate much of the recording of transactions and make accurate calculations for your records.

Keep Your Receipts

Receipts contain valuable information that you may need during tax time. Keep all of your receipts and organize them into categories that are easy to reference. Also, make sure to request a receipt any time one is not automatically offered.

Perform Financial Check-Ins

Accurately Maintain Your Inventory

Loss of merchandise, regardless of the method, will cost you thousands of dollars. Keep records of purchase dates, prices paid, and numbers of items received. Store your stock in an organized fashion where items won’t go missing and are easily accessible. Also, record the dates items are sold and for how much.

Invoice Correctly and Track Receivables

Invoice customers immediately and make sure the person doing this knows how to do it correctly. Have a follow-up procedure in place for your receivables that includes sending payment reminders at specified intervals. Invoices must have a payment deadline. You can offer an incentive, like a discount on the bill, to get vendors to pay early sometimes.

Look to the Future

Accounting for the future is as important as looking at what’s already happened. You can produce reports for financial forecasting, such as a common size analysis. The report lets you look at the numbers as percentages that you can apply to what will happen going forward. You’ll also be able to look at where your business stands in comparison to your competitors.

Hire a Professional

You have the option to hire a full-time accountant/bookkeeper. You could also work with an accounting professional as a consultant, or only on a part-time/seasonal basis.

Conclusion

The success of any business is dictated by its finances. Accounting for yours needs to be done accurately and in an organized manner. Use the tips discussed here to ensure your company always stays in good financial standing.

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