3 Small Business Accounting Tips You Cant IgnoreIt’s easy to neglect good accounting practices. When April 15 is months away, it’s tough to feel the incentive to hold onto your receipts. But when Tax Day comes around and you still haven’t gotten your act together, you always wish you had started a little earlier.
While I can’t promise that you’ll ever enjoy doing the accounting for your small business, if you break the process down into more manageable parts, it’ll definitely seem less daunting. Follow these essential tips to keep your accounts in order year-round:
1. Establish a routine.
Accounting has got to be one of the most often deferred small business tasks out there. Right up there with reorganizing your file cabinet and cleaning out the break room fridge, accounting just seems like it can be put off for a little while. Right?
Not quite. Accounting may not be fun, but it is truly critical to the financial health of your small business. The key is to handle it little by little over the course of the year, instead of in a caffeine-fueled panic during the week that your taxes are due. Set aside time each week—even as little as 15 minutes—to examine your finances. Have you recorded all of your invoices and expenditures? Have you set aside funds for payroll? Making time each week to revisit your finances helps you to avoid any surprises. And trust me, you never want surprises in your small business accounts.
2. Keep everything.
And I mean everything. Bills, invoices, bank statements, receipts, tax returns—anything related to the finances of your small business are documents you’ll want to hold on to. It may sound excessive, but in the small business world—particularly if your company is in its early stages—it’s better to be safe than sorry. File any financial document that comes your way. If you’re feeling overwhelmed, try an app like OneReceipt to keep your receipts (both paper and digital) organized. As you make your way through Small Business Accounting 101, you’ll figure out which documents are worth keeping and which aren’t.
3. Separate business from personal.
Keeping your personal life separate from your work is already a useful rule to live by, but it’s particularly relevant when it comes to organizing your small business finances. Sure, if you use your business credit card to pay for a personal expense or vice versa, it’s possible pay your business or yourself back through proper accounting. But why give yourself that headache? Mixing business with personal is a slippery slope—one that can lead to many a financial conundrum. Avoid the stress by maintaining separate credit and checking accounts for your business and personal expenses. When tax season comes around, you’ll be glad you did.
A final word of advice? Know when you’re out of your league. There comes a point in the growth of any small business when QuickBooks just isn’t enough to keep your accounts in order. If you find yourself struggling to keep up with your finances, don’t be afraid to call in an accountant. It will be money well-spent.
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