Did you know that accurate accounting is important to whether your small business lives or dies? Accounting is so dreaded by most small business owners that they would rather go to the dentist than do their books. As a small business entrepreneur, don’t let procrastination over your accounting become your reality. If you are willing to be proactive, there are ways to manage your accounting. The following five tips for managing your bookkeeping will, hopefully, make it seem not so overwhelming.
Balance Your Books Regularly
Delaying until month end to reconcile your books could be a costly mistake. Accounting errors are caught much faster within the week rather than digging through a month’s worth of receipts. Ongoing bookkeeping is not just better for your sanity but could lower the amount of money you might lose to an accounting blunder, accidental or deliberate.
Using Your Own Money
Most small business owners start out using their own money to pay for supplies, and often don’t realize the importance of keeping business and personal separate. You want to make sure your business starts off on the right foot, and continues, so ensure your personal finances are completely separate from your businesses revenues and expenses. Keep track of your data is essential. A business account and a credit card that is only used for business are essential.
Manage Your Receipts
I bet you never realized that your receipts fade over time, especially those thermal ones; and, never mark them with a highlighter as that destroys them. What would happen if your receipts which you’re planning on using for tax write-offs were no longer legible? What if you couldn’t even find them. This is where accounting software can help you manage those receipts on a regular basis, so you never have to worry about them when year-end tax preparation comes around. We recommend QuickBooks Online for your accounting and supplement that with Hubdoc, which is an online document retrieval and storage system.
This is critical for efficient small business accounting. You need to understand the accounting compliance restrictions, as well as the specific compliance requirements for your business. Your accounting software should be set up to address any compliance requirements of your business specially to avoid costly issues at year-end.
Mange Your Cash Flow
A good cash flow is absolutely pivotal to small business success and not something you should overlook. It’s easy to get used to paying for procures or services on credit, only to be horribly surprised when you reconcile your books. As a small business owner, you need to understand the importance of cash flow and profitability, otherwise you may make impulsive purchasing decisions that may impact the long-term viability of your business.
By paying attention to the above five accounting tips, your small business will stay on track. Effective accounting plays a pivotal role in the survival of your small business, and not understanding that will lead to failure. Instead of looking at business accounting as a dreaded tax think of it as a growth mechanism, and you’ll appreciate the critical role a well-managed set of books plays in your business success.
Need Help With Your Return? Where to Get Answers to Your Income Tax Questions
Do You Know Why the CRA Uses a Profit Test for Business?
Self Employed? Do You Know What Your Tax Obligations Are?
Summers Coming! Self-employment Ideas you can do in the Sun
Home-based Business? How to Make Your Home Client Friendly
Home-based Business? Some Ideas for Places to Meet Clients Outside Your Home
Should You Pay Yourself Salary or Dividends When You Incorporate Your Business?
Five Common Mistakes That Small Business Owners Should Avoid