Other

Accounting Tips for Small Businesses

 
accounting tips

One of the biggest reasons many small businesses fail is because of poor financial planning. It’s easy to get lost in expenses, income, and profit when it’s your first time running a small business. This can be intimidating, especially if you don’t have a strong accounting background.

Luckily, you don’t need to go back to business school to master the basics of money management. It all comes down to patience and the willingness to learn new strategies. Here are some accounting tips perfect for small businesses that will get you started on the right foot.

1. Accounting Services For Self-Employed

If you’re a self-employed individual or you only have a few employees under you at your small business, odds are it would be good to hire an accountant. Although you can probably get away with keeping your own records it’s more often than not that things fall apart. Your day-to-day accounting details are likely already being tracked on your banking and credit card records, but you shouldn’t rely on this alone!

Sit down regularly and write out these individual transactions using your bank records as a guide. Include income, expenses, and any extras. Basically, if any money is going in or out of your business, you need to have a clear record.

2. Business Bank Account

Next, aside from record keeping, you need a way to keep your business spending separate from your personal spending. Mixing your finances can have disastrous results if you’re not careful, so it’s best to avoid it altogether. You can open a new bank account under your business’s name and Employer Identification Number (EIN).

With a separate bank account, you’ll be able to pay taxes easier and record keeping will become a much simpler process. Even if you only have a sole proprietorship, you should consider opening a business account to ensure you don’t confuse any of your income and expenses with personal matters.

accounts

3. Profit and Loss Statement

A profit and loss statement might sound confusing if you never studied it in school, but it’s much simpler than it seems. It’s simply a snapshot of your business’s financial health. It includes a summary of your expenses, costs, and revenues over a specific set of dates. If your employees are keeping track of their time through time tracker or sheets like these here it can significantly help you out in determining how much time and money each of them is spending on regular tasks.

This statement is useful not only for helping you keep track of spending, but also to anticipate profit margins. You can see just how much you’re spending on expenses, as well as how much you expect to make currently. This means you can make smarter decisions that affect the future of your company.

4. Put Your Taxes Aside

No matter the type of business you’re running, you need a plan to cover your taxes. As a small business, you’ll be expected to pay the employer tax, and this can be costly if you don’t prepare. Always collect taxes at the time of sale. This will help you avoid paying a lump sum out of pocket when you file at the end of the year.

You can include taxes in your invoices, the cost of the product, or even just your own rates. No matter what you choose, make sure you secure tax money in a safe place and keep track of how much you’re expected to owe.

Learning how to take care of your small business’s finances doesn’t always come easy. It might take time and effort to learn the basics and discover how they work for your business. You don’t have to be a math genius to get the job done as long as you’re careful and diligent.

JOIN OUR NEWSLETTER
I agree to have my personal information transfered to MailChimp ( more information )
Join over 3.000 visitors who are receiving our newsletter and learn how to monetize your website. We are mainly focused on reviews of online ad networks and affiliate platforms. Please stay connected.
We hate spam. Your email address will not be sold or shared with anyone else.

Article written by Suresh

Suresh is author and owner of way2earning.com. He loves to help people by teaching the ways to make money online with advertising and affiliate programs. He is also passionate about technology and love to write reviews.

This Post Has One Comment

  1. Div Jangid Reply

    I think using a accounting software helps a lot in business. For me it even helped to improve the cash flow of the business.

     

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

DMCA.com Protection Status