Are you a small business owner? Do you sometimes struggle with the accounting side of things? You’re not alone.
In the first nine months of this year, more than 1.4 million small businesses filed a startup application with the US government. That’s a lot of competition, so it’s important to know all you can about accounting for businesses.
When you have your own company, you know it’s essential to understand the ins and outs of the money side of things. Here are four essential small business accounting tips.
1. Cash Flow Is King
Many business owners fail to keep up with their invoicing and end up with a cash flow problem. You can get behind quite quickly when you have bills to pay, but you haven’t asked your customers for payment.
Frequent invoicing is key to ensuring that cash receipts occur regularly. Do everything you can to encourage your customers to pay you on time, including offering discounts for early payment.
Automate your invoicing with a system that sends out follow-up reminders regularly. Don’t hesitate to put a customer on hold if they fall behind. Accounting services can help you keep track of your receivables.
You don’t want their cash flow problem to become your cash flow problem. When it comes time for you to be paying taxes, you want to have the funds to take care of them.
2. Hire A Bookkeeper
As a small business owner, you have enough on your plate. It’s more efficient to hire someone to care for your accounting needs. Bookkeeping includes organizing your paperwork and recording your business transactions using specialized software.
Accounting companies can help you find the right solution for your business needs. Automate transactions using accounting software, and you will be able to create reports quickly and efficiently.
3. Keep Your Business Accounts Separate
When you mix business and personal records, it is more difficult for your bookkeeper to do their job. It can also put your personal assets at risk if there is a problem with the business.
Open separate bank and credit accounts for your business, and don’t use them for personal expenses.
4. Segregation Of Duties Reduces Risk
Small businesses are more likely to have one person who takes care of many accounting functions. That increases your risk as that person could record things incorrectly without anyone noticing.
One easy segregation is to sign all cheques yourself. If you allow one person to both write the checks and sign them, there is more opportunity for fraud to occur. Have a different person reconcile the bank statements so they can see all of the transactions flowing through the bank.
Gain Confidence With Small Business Accounting Tips
When you take the time to learn a few small business accounting tips, you gain confidence and a better understanding of the money side of your business. Once you have mastered a few tips, you’ll be able to learn more and grow with your business.
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