60% of small business owners in the United States do not feel knowledgeable about accounting. However, accounting doesn’t have to be as complicated as it seems.
By following a few easy business accounting guidelines, you can make your small business bookkeeping much easier.
Do you want to learn more about how you can simplify your small business accounting? Keep reading these top seven accounting tips for your small business to take control of your business finances.
1. Separate Business & Personal Expense
The most important step to follow when you are doing the accounting for your business is to keep your business expenses and your personal expenses separate.
If you use the same bank account or the same credit card for both of these, you will find that it is difficult to document your expenses and it makes it harder to separate these expenses when you are doing your taxes.
When you are in a rush or already buying something for yourself, it can be easy to use your personal money to buy something for your business. However, this can make your finances really messy and difficult to interpret.
By creating a dedicated business banking account, it will save you a lot of time and stress during tax season! It will also make it easier to deduct business expenses from your tax return.
2. Track Every Expense
Another important part of keeping track of your business finances is making sure you track every single expense for your business, no matter how small. This way, you can track your cash flow and know where each penny for your business is going.
Your spending adds up quickly, so keeping track of your expenses makes it easier to budget.
Using business credit cards makes it easy to track your purchases without having to keep paper receipts.
3. Set a Business Budget
When you know more about the expenses and the income for your small business, it will be easier to set a budget. This is one of the first steps you should create for your business plan, as it can improve your financial health and protect your business.
Something that can help you stay on top of your accounting and your business finances is reviewing your budget quarterly and making any necessary changes.
This way, you can use your budget for previous years to project your budget and your income for future years. If you have a busy season for your business, having a quarterly budget will provide you with an accurate snapshot of your finances.
4. Outsource Payroll
Next, you should consider outsourcing your payroll. Hiring a professional accounting company, even temporarily, can make a big difference and lessen your stress as a small business owner.
While it may not seem difficult to pay your employees, payroll is a very involved process. It includes paying your employees, filing payroll tax returns, and even withholding employee taxes.
Managed payroll is reasonably priced and makes it much easier to run your business.
5. Update Your Books Weekly
When you run a business, it can be easy to put unimportant or low-priority projects on the backburner. If you do not follow these bookkeeping tips, your finances can quickly get out of hand.
To make sure your books are always accurate, you need to dedicate time each week to update your books. This will make sure you do not have any receipts or invoices piled up.
This will also save you a lot of time when you are filing your taxes. Rather than having to go back through each of your expenses, your information will already be gathered and categorized.
6. Create Financial Projections
Something else that can help you with your small business accounting is to create financial projections for your company. This will help you estimate the future income and expenses for your business.
By having this information ahead of time, you can better prepare for your future finances. This can also help you make important decisions for your business finances.
For example, knowing more about your potential income will help you decide whether or not you need to invest in a loan or if you need to get additional funding for your business.
It can also help you make important changes to your business. If your projected expenses are more than your projected income, it might mean that you need to change your pricing or production for your business.
7. Get Help With Tax Preparation
Finally, you should get professional help with tax preparation for your small business. Studies show that 40% of small business owners spend over 80 hours a year on taxes. This equals two full weeks of work.
Not only do taxes take a significant amount of time that could be spent on other important projects, but they also are a complicated process that requires a lot of knowledge about tax law.
By hiring a professional to help with tax preparation, you can get your taxes done more efficiently and you can be confident that they are filed without any mistakes.
Learn More About the Best Accounting Tips for Your Small Business
Starting a small business can be overwhelming, especially because you have to become knowledgeable in every aspect of running a business. If you are worried about your small business finances, following each of these accounting tips will make it much easier to understand.
Otherwise, you can get help from professional accounting companies to simplify the process.
Do you want to learn more about accounting advice for your business? We can help! Check out our website to learn more about accounting and to find business resources for finance and more.