Accounting Tips For Small Businesses
Proper and adequate accounting is the lifeblood of any small business. If you make mistakes in this area, you run the risk of impeding the growth of your small business and putting yourself in danger of financial failure in the long run. Therefore, it is important that you adopt some good practices when it comes to your business accounting.
Here are 5 accounting tips for your small business to set you on the right road to success.
- Hire a Bookkeeper
Unless you have a background in accounting or have a qualification in this area, it is best to hire a bookkeeper to look after your financial affairs. With a bookkeeper on board, you can have peace of mind that your accounts are being professionally handled in the correct and appropriate manner. The experience and understanding that a professional bookkeeper can bring to your small business will be invaluable and will form an integral part of its future success.
- Keep track of your Expenses
Keeping a daily record of expenses incurred will make it easier for you to reconcile your list of expenses at the end of your accounting period, whether it is weekly, monthly or bi-monthly. For the majority of small businesses, expenses can be offset against tax liability, which makes it important for business owners to have accurate records of expenses and receipts as proof of each expense.
- Monitor your Invoices
An integral part of your business is the receiving of money for your product or service; therefore, keeping an eye on the invoices that are due to you is vital. Be firm yet fair with your customers and request what is owed to you when it falls due. While a large level of sales is a good sign for a business, it is more important that you receive the money for those sales as the liquidity of your small business depends on it.
- Operate a Filing System
Organisation is a key factor to having a good accounting procedure in place in your business, which is why an efficient and reliable filing system is an absolute must-have! Make sure that you file all receipts, invoices, bills, tax returns etc. carefully and accurately as they will be required at certain times throughout the accounting year for tax or audit purposes.
- Keep your Personal Account and your Business Account Separate
When your business is small and starting off, you may think it is easier to operate your personal finances and your business finances from the one bank account – you’re wrong! It is very important that you keep your personal and business finances separate, as it will only cause confusion when it comes to getting your accounts in order. From the start, it’s best that you treat your business as a separate unit.
You can help to ensure the success of your small business with these simple yet effective accounting tips. Get it right from the start and you won’t ever have to look back!