Managing a business consists of an extensive to-do-list; And within this list my least favorite is the financial management part, maybe you can relate – Unless you’re an accountant by profession.
By: Tatiana Cortes
Accounting is essential for the success of your business and is extremely important to keep your “books” accurate and in proper order at all times. So, here are a few accounting tips you will need to implement as an entrepreneur:
1. Know the Law
You can’t practice good bookkeeping if you don’t know what you need to be keeping good records of. As a small business, you need to make sure you know the law and how it applies to your business. Make sure you are in compliance, filing taxes on time and keeping records of income, expenses, invoices, etc.
2. Personal & Business Don’t Go Together
The best way to simplify is to keep things separate when it comes to finances. Open a separate account for your business and keep your records separate.
3. Record Your Spending
The way you are going to offset your profits at tax time is with your expenses. This is why is so important to maintain a good and detailed record of your expenses with receipts and invoices. Items that can range from your home office furniture, laptop, to a pack of post-it notes – it all adds up.
4. Take Advice
Find a personal accountant to ask for advice. An accountant can give you good bookkeeping advice, it will keep you on track and ensure that at the end of the year you have all the records and documents you need.
5. Cloud-Based Software Is the Way
Purchasing accounting software and keeping up with upgrades it’s a thing of the past. Popular small business accounting services such as Xero provides you with up-to-date accounting products and stores your data in the cloud.
6. Emergency Fund
Save money either for emergencies or rainy days. If you have a month where work doesn’t come in or invoices don’t get paid and your business cash flow is a problem, the money you have saved aside can keep you afloat during those particular months.
7. Backup, Backup and Backup
When tax time comes, and you need to face the IRS – records are life! If for any reason they’ve been lost or destroyed, you will need to provide evidence of such to the IRS to prove this really happened. So, save yourself a heart attack and store records in at least two different places. A good idea would be to scan them and store them in Dropbox.
8. Little but Constant
Balance your accounts regularly, at least once a month when you get your bank statement and make sure it matches your balance sheet. Avoid having to enter months of accounts near Tax Day and stressing to reconcile and find old mistakes.
9. Chase your Debtors
Nothing hurts a small business more like late payers. Your terms and conditions should include payment terms and the repercussions if clients don’t pay on time. Be ready to enforce the consequences to those that don’t abide by the terms and conditions.
10. Establish Financial Goals
Establish financial goals and be real, break those goals down into reachable and measurable ones. Monthly, weekly or even daily revenue goals allow you to stay on track and make necessary adjustments for constant growth.