Accounting is a necessary chore of all businesses. If you don’t manage debt, receivables, and marketing expenses accurately, your company will sink before it grows. It just takes a little perseverance and planning to ensure that your company’s records are as accurate and complete as possible.
If you don’t feel like you have a good understanding of accounting, small business accounting services can help keep your company in good financial health. To keep moving toward your long-term goals and improve profits, you should also follow these proven small business accounting tips.
#1. Keep Accurate Records
Having all of your information compelled in one location can make small business accounting much easier. Most of your day-to-day accounting details can be easily tracked online via your banking service. With all of the information in one place, you won’t have to waste time scrambling to meet a request and will save yourself a headache.
Online banking can track simple debits and credits to your account. However, when it comes time to accurately state how things were spent or earned, separate bookkeeping records absolutely must be kept. The records need to track things like how cash was spent, what things were purchased via credit card, whether expense reimbursements were made to employees, etc.
Most small business owners invest in software that makes bookkeeping for small businesses much easier. We suggest picking software that allows you to track the money flow and has an integrated invoice feature. Everything you track will only help you down the line, which you and your bottom line will be thankful for!
#2. Separate Business and Personal Expenses
Having a separate and dedicated business bank account for checking and savings saves you precious man-hours when it’s time to tally up deductible business expenses. Mixing personal and professional finances can become disastrous, and it is important to establish get used to these separate accounts from the start. When the accounts are separate, tracking the flow of money will be a breeze. Additionally, having separate bank accounts also makes your life much easier when tax filing season comes around.
Although sole proprietorships don’t require a separate for your business, we strongly recommend that you do so. Before you can open a business account, you need an official business name that is registered with your state.
#3. Dedicate Time to Update your Books
Setting aside time each week to get necessary paperwork in order and avoid letting receipts and invoiced receivables pile up will ensure that you are actually getting it done. Sticking to the time you set aside can save you a lot of catch up work as tax session rolls around.
If you feel as if you have no extra hours in your week, your small business should consider outsourced small business bookkeeping services. Limitless Investment and Capital offers small business bookkeeping starting at $199/month.
#4. Keep Record on Labor Costs
Your employees are a crucial part of your small business success, and paying them is a top priority. In fact, the price of labor constitutes a significant part of the total cost of a small business, and no business can survive for long by ignoring labor costs. Your accountant or accounting software should also be able to help you calculate and pay your payroll taxes, which have different rules and deadlines than income taxes.
#5. Learn how to Invoice Accurately
Most small business owners are unfamiliar with the concept of invoicing, but it is necessary to record specific details about various transactions. Proper invoicing can prompt clients to make payments on time and keep track of clients that consistently fail to pay within the agreed-upon terms which can hurt your small business.
#6. Collect Taxes at the Time of Sale
It is essential to collect taxes at the time of sale to avoid paying a hefty lump sum tax at the year’s end. Collecting at the time of sale also ensure your business won’t incur delayed tax payment penalties.
#7. Create Financial Projections for the Future
Staying in good financial health is the key to long term success, and just because your business is financially sound today does not guarantee its future. Using financial projects, you can estimate where your company will be the following year and even two or three years down the road. Financial projections can help you figure out where to invest business revenue and whether and when you’ll need to start applying for a business loan.
Keep Your Business Growing
Finance is the backbone of any business, so these small business accounting tips and tricks are essential to business success. You might be able to get away with keeping your own books in the beginning, but as your company grows and tax time approaches, you might feel a little bit lost. Fees for incorrect tax filing or messy bookkeeping can be high, not to mention the time you spend in correcting errors. Outsourced accounting services for small businesses allows you to focus your time on creating, selling and growing the products and services that create value for your business. Let your outsourced accounting team focus on processing your payments and invoices, managing your vendor relationships, and keep a pulse on your financial trends and company statistics.
Limitless Investment and Capital’s Outsourced Accounting Services for Small Businesses
Limitless Investment and Capital has strong functional outsourcing expertise in end to end accounting processes covering daily accounting activities, month-end, and year-end account finalization processes, employee reimbursements, payroll processing, management reporting, and financial analysis. Get in touch with our Certified Public Accountants today to learn more about our small business accounting services.