One of the top priorities for any new small business owner is to ensure strong financial health for their company. This is why learning accounting tips and how to keep track of money in your business is of the utmost importance and requires the very best due diligence on your part.
Here are the top five accounting tips to follow for your business:
1. Give Consideration To Hiring A Professional
You technically don’t have to hire an accounting professional if you don’t want to, but it is at least something that you should give consideration to.
Also, keep in mind that you don’t have to hire a bookkeeping professional full time if you can’t afford it, and you could instead hire them only part-time for a few hours a week.
The main reason to hire a professional, however, is if you’re not very good with numbers and/or if you need to focus on other parts of your business as it grows.
Accountants can help to record and classifying your expenditures and your income, plan your business from a financial point of view, keep your financial records neat and orderly, and file taxes (and take deductions on taxes that you may not have been aware of, to saves you money down the road).
2. Open A Business Bank Account
When operating a business, you never want to use your personal bank account. Mixing your professional and personal finances to together is never going to go well. Instead, you need to get a business bank account.
In fact, opening a business bank account is easily one of the very first things that you should do when starting a new business, and it should also be opened under the name of your business rather than your own name.
When you keep your professional and personal finances separate, it makes tracking money significantly easier, and it also makes things easier for when tax season shows up.
3. Utilize A Point of Sale System
These days you will definitely want to use a point of sale software system, such as the QuickBooks POS system, rather than using a traditional cash register.
Point of sale systems will greatly boost your business efficiency and make it much easier for you to label expenses, track your cash flow, maximize tax write-offs, and making things easier for your customers (because they are faster and can accept more payment methods than cash registers can).
4. Ensure Your Invoices Are Accurate
Invoices are so much more than just prompts for your clients to make payments. That’s because invoices are really records of your transactions.
As a result, it is very critical for you to ensure that your invoices are one hundred per cent accurate.
It’s also important for you to understand the difference between invoices and receipts. An invoice is always issued before payment is made, while receipts are always issued after payment has been made.
In addition, invoices are used to help keep track of the sale of services and goods. In contrast, receipts are documents that the client or customer has already paid for the goods or services.
5. Have A Strong Reserve of Cash
In your personal life, it’s always a wise idea to have a healthy stockpile of cash set aside in an emergency fund to help cover the costs of one to six months of living expenses in the result that things get bad and go downhill.
All the same, you’ll want to do the same for your business. A major mistake that business owners make is they take the cash they had set aside in an emergency fund back into their business in order to help scale it.
But this is rarely a wise strategy to follow. Have a minimum of three months of basic operating expenses tucked away in an emergency fund, and refuse to touch that money under any circumstances other for when things go downhill and you have no choice.
More Accounting Tips For Your Business
You have to stay focused on accounting when running any small business of any type.
Failure to do so is undoubtedly going to have drastic consequences on your business down the road, as you’ll fail to manage debt, market your expenses, and so on.
The good news is that simple bookkeeping strategies like we have covered here today are all you need to do if you want to keep your company’s financials in order.