There are over 33 million small businesses in the U.S. Starting a business can be incredibly challenging, resulting in long days, and not much time for anything else.
One of the most important aspects of owning a business is ensuring your finances are all in order. When it comes to small business accounting it can be incredibly difficult to do yourself, but you might not have a choice in the beginning.
When funds are tight it might not seem worthwhile to hire a dedicated accountant. There are some tips and tricks you can use to help you along the way until you can spend the money to hire an accountant.
So, keep reading to find out more about five small business accounting tips.
1. Plan for Major Expenses
The more time you have to plan for an upcoming expense, the more likely you are to be prepared for it. Time flies when you’re running a business, so annual expenses tend to creep up on you. If you didn’t plan for these expenses ahead of time you might need to take out a loan to cover yourself.
The best thing to do is put any expenses you’re aware of in a calendar, even if it will only matter in a few years. This helps you stay on track and plan for what’s coming. It also gives you an overview of your year’s planned expenses.
Doing this allows you to save up money in the flush periods without finding yourself short in slower months.
While planning your expenses you need to separate the necessities from the nice-to-haves. If you know you need to upgrade software soon, or replace equipment, it won’t make sense to spend money on upgrades that can wait until later in the year.
2. Don’t Forget About Taxes
A large percentage of Americans don’t understand how taxes work, for most people tax season is a nightmare. As a business owner, you need to remember to pay quarterly taxes.
When it comes to dealing with taxes, the best thing to do is put money aside every month for taxes. Also, make a note of the tax deadline in your calendar to make sure you make your payments on time.
It’s critical that you pay your payroll taxes. Not only will you not have paid your taxes, but the IRS views it as taking money that belongs to your employees.
3. Track Expenses
The best way to ensure you don’t miss out on any tax write-offs is to keep track of your expenses. To help you with this it’s a good idea to have a credit card, and maybe even a bank account, that is solely for business use. Most card statements categorize expenses, so you’ll be able to recognize the expense.
Make sure to always use your business card for business expenses, no matter how small or insignificant. If you pay cash for some pens and paper, you might lose the receipt and forfeit the tax write-offs.
When it comes to tracking your mileage, it’s a good idea to routinely write down all the trips you take, even if it’s a business lunch. This way you don’t need to estimate your miles. If you’re audited this will be useful as you’ll need to substantiate the miles you wrote down.
In the same vein, don’t mix your business and personal expenses. It’s crucial that you separate your payment methods for both personal and business costs.
This can make tax season a nightmare as you’ll need to review every transaction to determine what is company related.
4. Keep an Eye on Invoices
Bills that are paid late hurt your cash flow. If you don’t keep an eye on all your invoices, some might slip through the cracks.
One of the best accounting tips to ensure all invoices are paid is to either track your billing yourself or assign someone to do it. From there you need to make sure a second invoice is sent, and even make a phone call to ensure payments are made before the deadline.
Every late payment can be seen as an interest-free loan, so simply sending out an invoice once won’t cut it.
5. Have a Go-to Accountant
The best way to ensure your accounts are always up to date is to have an accountant. Taxes, bookkeeping, and finances are what they do every day. They know all the ins and outs of keeping to handle your finances, while also minimizing errors.
While it can be a big expense to hire a dedicated accountant, bookkeeping services offer you professional skills without needing to employ an accountant full-time. You can find the right fit for your budget without sacrificing quality.
Hiring an accountant will give you peace of mind, plus you won’t have to stay late or work on weekends just to make sure your finances are in order. This gives you time and energy to work on expanding and growing your business.
Small Business Accounting Tips Made Easy
Whether you’re just starting out, or you’ve been a business owner for a while, it’s always helpful to learn more about small business accounting tips and tricks. It’s never too late to learn new things to ensure your business accounting is in order.
If you’re ready to get started with a bookkeeping service, contact us today to schedule a free strategy session. We keep your books up-to-date so that you can make informed decisions, seize opportunities, and grow your business fast.