6 Simple Tips To Keep Your Small-Business Finances In Order Starting a small business is a huge undertaking and accounting causes the most headaches for the small business owners. It’s one of those back-office tasks that isn’t top of mind when you decide to run your own business, and yet it sucks up your day and makes running a successful business that much harder. But there’s hope, and it starts with getting organized. Here are 5 tips for the small business owner to help you tackle your accounting: 1. Keep your purchases separate. That new school supplies for your kids isn’t a business expense, but your business credit card was handy so you used it. Sure, you can pay back your business for a personal expenditure, or the other way around, but if you’re going to do it right you actually have to record an accounting transaction. This makes for a lot of complications and causes unnecessary headaches. By keeping separate bank and credit card accounts for business and personal, you’ll save yourself hours of work and make it easy to keep track of deductible expenses in one place. 2. Call in a pro. Since the days of the abacus, bookkeepers and accountants have been trusted and respected allies to small business owners everywhere. Their intimate knowledge of the profession as well as tax laws in their jurisdiction will save you money almost every time. It’s tempting to try and save some money and do it yourself, but it’s almost never more cost-efficient in the end. A bookkeeper will ensure you get all your deductions keep you penalty-free. On that note, the cleaner your records, the fewer billable hours you’ll have to pay, so make sure you’re organized year-round. But when things get technical or taxes are due, save yourself the money, time and headaches and call in a trusted professional. 3. Pencil it in. Set aside about 15 minutes every week — that’s the equivalent of just one coffee break every seven days — to organize your finances, and don’t let other things take priority during this time. You’ll have more insights into your business, be able to make more informed financial decisions and have everything organized when you hand your paperwork over to your bookkeeper. You will save money too – an organized file takes much less time to process than a stack of receipts. Something always feels more pressing than your finances. But when you find the time every week, you’ll feel your stress levels — now and at year-end — fall fast. 4. Consider your people. When you’re looking for insights into your businesses spending, don’t forget to properly track what is likely one of your biggest expenses: labor. Whether you’re paying a full staff or you’re the only one on the payroll, make sure you’re tracking the costs of wages, benefits, overtime and any other costs associated with labor. By tracking your spending on labor, perks and benefits, you may find you have more money to incentivize your employees — or that you’re outspending your budget. Either way, doing the math now can help you make better decisions later. 5. Finally, don’t forget to get paid. This one seems pretty obvious, but you would be shocked at how many small business owners don’t properly track invoices and customer payments. If you’re not keeping proper records that you can make sense of at a glance, it could be months before you realize you have outstanding invoices. You could be collecting payments late, or missing some altogether. Make sure you’re properly tracking all payments due and recording when each invoice is paid, how long customers generally take to pay, and which customers you’ve had difficulties collecting payments from in the past. 6. Hire a Bookkeeper. Your bookkeeper can keep your records in a computerized accounting system that will allow you timely, accurate reports. If you are finding you are paying penalties and interest on overdue government payments, hiring a bookkeeper to track your income and expenses and process these returns will actually save you money in the long run. You can track your business finances month over month – year over year to have a clear understanding of how your business is doing.
Posted on: Thu, 12 Sep 2013 19:21:44 +0000
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