Accounting can be a complicated and daunting task for small business owners. This list has been compiled to help the small business owners in managing their finances correctly.
Bookkeeping is important for all businesses for managing their cash flows, profitability and business sustainability in this competitive world. If we couldn’t able to manage our cash flows with accuracy then it will be critical task for the business owners for expansions.
Tax liabilities is also important to be manage sometimes, if the business owner is not aware how to record the investment , convertible notes , short term contributions from partners, then this can be booked as revenues which leads to high revenue even though these are the liabilities for the business and ultimate results into incorrect tax payment to the government.
Amortizations- this is also an important factor it plays major role in managing the tax liabilities, sometimes business owners are not familiar with these adjustments due to which they pay more taxes to the governments.
There are lot of more things for discussions and management point of view if the business owner couldn’t hire the professional accountant then following the ten tips will help them to streamline accounting and bookkeeping.
- Educate yourself on the principles of bookkeeping and accounting.
Every business owner should learn the key components of bookkeeping and accounting. There are vast amounts of online resources geared towards teaching small business owners accounting. These online resources will aid in teaching you from a basic level of financial management.
- Separate your business transactions from your personal transactions.
A lot of issues can arise from not separating the two types of transactions. It can become confusing attempting to sort through your business and personal expenditures when they are combined. This may leads to incorrect cash flows and impact on business expansion and budgeting for short term as well as long term business point of view. A professional accountant can help to manage these type of activities very smoothly.
- Make things as simple as possible.
Not being able to determine the details of any of your accounting books is a cumbersome problem. Small business owners should keep a separate log of expenses, debts, and income. Each of these separated records should be maintained in individual books dedicated to a category of finance. This is very complicated thing when you have large number of transactions took place during a month or quarter, for managing this we need a proper accounting tools.
- Do not overlook the small things.
Small expenses are easily neglected. When this happens, these little expenditures can start to add up. Expenses such as employee incentives or purchases you made for the business should all be kept on record.
- Implement new age technology.
There are several online software programs devoted to the tasks of business accounting. Some of these accounting software packages are called Quickbooks, Xero, Intact, Sage, NetSuite and PeachTree. Also, you can always use cloud storage as an option.
- Commit to doing a periodic review which should be scheduled for every week or once a month.
By doing a regular review, you will stay ahead of your finances and will have fair warning if your business is beginning to suffer. Also, you will be able to take note of where your money is going.
- Always review your tax reports.
When you are a business owner, the business taxes must be paid promptly. Your tax payments should be documented along with your other expenses. By reviewing your tax report, you can dodge non-payment penalties.
- Always check for unwanted expenditures.
You can do this by monitoring your business expenses. Unwanted expenses are not suitable for a kind of business that desires to make maximum profit. Find a way to lessen or terminate these unnecessary costs. A budget plan will aid you in eliminating the financial strains of the unwanted costs. This can be done by doing some market studies of similar businesses for that we use ProfitCent, Value Builder’s tools which helps in knowing actual standing position of business.
- Monitor your debtors.
In the world of business, credit sales are unavoidable. Always keep on top of who owes you money. Send them an occasional friendly reminder in regards to payment. If possible, create a separate accounting book to keep track of them or use proper accounting software’s which does the follow ups with the debtors and helps you to revenue forecast.
- Have a backup plan.
As per the government norms for each and every business we have to keep accounting records backed up for five years because any time Federal / state audit can be scheduled by government if they found inconsistency with the tax filing both on paper and in some kind of digital storage. This way, if the worst happens, you are prepared.
By following these ten tips you will manage your normal business activities, for long term sustainability and stable growth it’s always good to have professional accountant on site which will save time and cost and you will be on the path of the prosperity and growth.