Many small business owners invest a lot of their own money in their companies. Naturally, the financial wellbeing of your startup is a top priority, which is why keeping up with accounting is essential for small businesses.
It's possible you're not an accounting expert, so here are a few tips to put you on the right path:
- Keep accurate, complete records. Both for your ability to monitor the financial status of your company and for sending information to your accountant at tax time, it's critical to have all of your records in place. You should track and keep an eye on expenses as well as incoming funds, otherwise you might miss out on opportunities to write-off costs. For the same reason, it's useful to know which expenses are tax-deductable and important to record your deposits correctly.
- Use purchase orders and invoicing strategically. These documents serve as records of transactions, but they're also tools to make sure you get paid. Sending out invoices promptly helps you receive payment faster, which is important for your cashflow.
- Run profit and loss statements regularly. These reports function as a health check for your business - plan to do them on a regular basis.
- Take advantage of technology. To streamline accounting tasks, such as running those profit and loss statements, consider using small business software. Accounting programs can reduce the chance of human error and keep records safe, organised and accessible.
- Plan for the future - with a budget. Especially for major expenditures, it's vital to plan ahead. You don't want to have to turn down key business opportunities because you don't have the funds.
- Have a system. You should set aside time to go over your finances. Follow procedures that you're comfortable with and integrate your information as much as possible to make the process more efficient and complete.
- Call on a professional when needed. If you lack an accounting team, don't hesitate to use the services of a professional. Tools such as CashManager by Accomplish can make it easy to send the relevant information to accountants so they can better assist you.