Most small businesses have a tough time with their accounting processes. It involves maintaining a detailed income and expense account, calculating taxes, salaries and a whole lot of other tasks. You can double up as a bookkeeper or hire a part timer to help you. In any of the cases it does help if you follow a few basic rules. Here we take a look at 10 tips that would help you get your small business accounting on track.
Open A Bank Account
Once you have registered your business you need to open a bank account. Whether it’s a LLC or a partnership your first transaction should start with the bank. Even if you are the sole proprietor, never mix your personal and business transactions together. Start with a business checking account and from here you can transfer a share of the revenue as your remuneration to your personal account. This helps organize funds better and prepare for taxes.
Whether its sales revenue, loans or angel investment into your business, each and every transaction needs to be recorded. You can make use of and accounting and billing software like Invoicera, excel sheet or even a piece of paper, but make sure every cent that comes in is accounted for.
Detail All Expanses
Detail even the smallest of expenses incurred for your business. These may include shopping for stationery items of meeting up with a client in an outdoor café. This allows you to have a better idea of your finance and the input cost that goes in your business.
Avoid Cash Transactions
Try and avoid cash transactions as much as possible as it can be difficult to keep trail of them after a year. If you do, make sure you collect a bill or receipt for every transaction. For all major expenditure use a check or a credit card as it can immediately record your expense.
Keep Aside Money for Taxes
Irrespective of which country you are running your business on or selling different types of products and services you would have to pay taxes. So keeping aside money for the taxes and systematically planning for it doesn’t put your business operations into jeopardy. Pay taxes on time as avoiding them or delaying them can lead to penalties.
Adopt Payroll System
As your business expands and you start hiring employees adopting a payroll system would be a good choice. This will help you calculate their wages and taxes without any errors. All the processes in these systems are automated and save you quality work hours.
Know Import Taxes
In a globalized environment you are likely to import goods from different parts of the world. The taxes vary on the types of good and the country of their origin. Importing goods from a particular country may often lead to additional costs and knowing the import taxes like the back of your palm allows you to make sound business decision.
Keep Track of Dues
Small businesses and start-ups can suffer a lot from unpaid and late invoices. This can severely affect your cash flow and hence you need to regularly keep track of your billing. You also need to detail out a process for unpaid invoices. Call the clients, re-send them the invoices and levy penalty for late payment.
Use an Accounting Software
Using an accounting software can help you manage your business finances easily. There are a number of free tools available that allow you to track every single cent of income and expenditure. This also helps in budgeting, estimating taxes and keeping track of employee salaries.
Hire A Professional
Last but not the least, hiring a professional accountant has many benefits. These people bring in their expertise to the table and help you manage your finances methodically. They have sound knowledge of the various account tools and software and this allows them to speed up accounting, unearth key statistics all of which goes into quality decision making.