Accounting Tips Every Small Business Owner Should Know

Accounting Tips for a Small Business Owner

Accounting is one of the most important parts of running a small business. Unfortunately, so many small business owners leave some of the most critical details of accounting for a time when they are forced to think about them. This can lead to inefficiencies in your business, the mismanagement of finances, and missed opportunities. The following are a few tips to help small businesses owners manage their accounting better.

Record All of Your Expenses

Times can get hectic when running a small business, and it can be easy to lose track of your expenses if you are not careful to record them. For example, monthly costs, like paying your membership fees for your coworking space in Cincinnati or New York might be simple to remember, but one-time purchases or new expenses for things like supplies might be forgotten.

Don’t fall into the trap of believing you will be able to remember to account for expenses later. Instead, develop a system for recording all of your expenses as you pay them out. If you have good accounting software, it might already come with expense tracking features. If not, you could consider any number of expense tracking apps for your phone.

Open a Separate Bank Account

Many small business owners and solopreneurs think that it will be easier to start out using their personal bank account for business. The truth is that this is likely to make things more difficult at tax time and it could even get you in trouble with the tax authorities. It will be much easier to manage your finances when there is a clear line between your personal income and expenses and those that apply to your business.

Follow Up With Late Payers

Many small business owners have to learn how to deal with late payers. In some cases, you may even need to learn how to handle clients or customers who seem like they are not going to pay at all. While you do not want to hassle or harass anyone, you can’t afford to let things go too far. Your business relies on its income, and if it is not coming in on time, that can make it difficult to manage your expenses. Make sure your clients/customers understand the terms of the deal and get your invoices out on time. Additionally, you should develop a strategy for reminding customers of late payments.

Meet Your Obligations

You rely on your customers and clients to pay on time so you can meet your obligations and your suppliers rely on you in the same way. Keep track of your payment obligations and make sure to get your suppliers paid on time. You don’t want to end up with the reputation of being unreliable. After a while, your suppliers might not want to deal with you if they always have to chase you for payments.

Structure Your Business

The legal structure of a business can make a significant difference to your finances. Some may be easier to set up, but there could be options that might offer better tax incentives. It is important to consider the different options that are available so you can select the one that will be the most beneficial to your business.

Accounting might not be the first thing on your mind when you start a business, but these are matters you need to handle early. By taking the time to consider some of the accounting issues, you can increase your business’s chances for success and save yourself a lot of trouble in the future.

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28 comments on “Accounting Tips Every Small Business Owner Should Know

Very true. Start out doing things right and you’ll never have to scramble later.

I’m having to get used to doing all of our record keeping because my husband always did it. He wasn’t super organized, so it is quite a chore.

Great advice. I am meticulous in writing down all my expenses.

Hi Patricia, It’s good to keep up with it so that at the end of the year you can relax.

Small businesses tend to be easier to do bookkeeping and accounting too. There are lots of tools you can use online for DIY accounting.

Hi Accountant. I remember the only time I ever had a professional do my taxes. The used the same software I always used. I went back to doing them myself the following year. There are definitely times when you need an accountant, but there are certainly more tools than ever that can help you prepare for tax time. Have a great week!

Thanks for sharing your thoughts and insights! Great read.

Thank you Hiller Plumbing. You have an impressive blog with great information for homeowners. Have a wonderful week!

You can do your own accounting or hire people to help you settle your financial status and taxes.

Hi Depro. I enjoyed checking out your blog. Have a wonderful week.

Accounting is very important for every type of business nowadays. Nice blog.

Thank you, Ebrahim. As a specialist in internal audits, what is the #1 accounting mistake you see small businesses making?

It is good to know that you will want to have a separate bank account for your business. That doe seem like home run businesses should be aware of. It seems like if you can track what things are being spend on for the business easier then the booking will be easier to do. Personally, I would want to hire an expert to help with the bookkeeping. Mainly because I such at math and I wouldn’t want to do it myself.

Hi Ivy. I feel the same way. Although having your expenses and income organized is still something you have to do when you go to the bookkeeper and that is the hardest part for me.

You make a great point about how you don’t want to assume you’ll remember expenses later, you’ll want to track every expense. It seems like a small business owner would benefit from an outside bookkeeping service. This way they can save time and possibly money by focusing on other aspects and leaving those types of services up to professionals.

Hi Sam. I always think that if you can hire a pro to do what you don’t do well, that’s the ideal. You still need to prepare for it though. Handing your bookkeeper a box full of arbitrary receipts won’t work (at least it usually won’t).

Thanks for sharing these tips! Glad I popped by your informative blog.

Thank you, Flor. Stop by anytime!

Accounting is such an important part of a business. Some may not have the ability to have their own accounting to do the books on the business and outsourcing the job is a good way to assure of accounting and bookkeeping done properly.

Yes, it is, BookKeeper. As tax season is upon us, I am seriously considering that very thing.

Very helpful tips in hiring accountants for business. It is important to do this to always keep track of your companies financials.

Hi, Accountant. Yes. And once you do it, every year after is easier because they have your previous year’s records.

Great information, I have always struggled to manage my books while doing plenty of other things to manage my business. My business is growing faster & I think I will have to hire a professional because it affects my productivity to make strategy for my business.

Hi Chris. A wise decision. Have a fantastic week!

Awesome post! How do you maximize personal productivity in small business?

Hi Ranch Office. I maximize productivity by setting reasonable goals, including margin in my life, and reassessing my priorities every day. By the way, Your space looks very cool. If I was in Texas, I would want to have meetings there!

Outsourced your accounting and bookkeeping needs so that you won’t spend too much. It is not a daily task and only needs to be done in certain time of the year.

Hi Accountant Stones Corner. I believe that it is better to pay professionals to do what they are good at so that you can do what you are good at.

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