Top 10 Accounting Tips to Save Your Small Business Time and Money

Small businesses have a lot of details to oversee to remain competitive. Accounting is a factor that plays a vital role in business. It helps you document your income, track expenses, monitor taxes, ensure compliance, inform investors, and more. All of these guide you in making critical business decisions. To help you minimize your mistakes as you move towards achieving your goals, consider implementing these proven small business accounting tips:

1. Make Your Business and Personal Expenses Separate

You need a dedicated business bank account to manage your small business accounting needs. This helps you stay organized while mitigating errors when it is time to tally up your deductibles. If you are funding some expenses with your personal money, you must ensure that you account for everything clearly. Moreover, keeping things separate limits your legal exposure to business debts if you are an LLC.

2. Account for Every Business Expenditure

Take note of and categorize all of your expenses as this will help you stay on track during the tax-filing season. Apart from this, diligent tracking enables you to keep on top of your small business’ cash flow, which helps you see where you stand. Are you about to run out of cash? Have you used up all your lines of credit? It would be best to use a business credit card for all your transactions to help with your monitoring. Apart from earning rewards, this helps you maximize your tax breaks.

3. Record Your Income Accurately

It is essential to keep track of all your incoming cash flow. This includes daily sales, money from your business loans, and other cash infusions to your small business. If you don’t make proper documentation, the IRS can levy you with extensive penalties. Getting a tax accountant in Carmel will help you keep a detailed record.

4. Automate with an Accounting Software

Leverage technology and use accounting software for your business. This can be used on your own, or you can use this with the aid of your small business accountant. The purpose of this program is to help you stay on track with your income and expenses. It also allows you to send invoices and pay your suppliers. This is also a helpful tool for generating reports.

5. Dedicate Time to Keep Your Books Updated

You must pencil this into your schedule to avoid letting your receipts, documents, receivables, and more pile up. Be vigilant in keeping this schedule so you won’t lose any paperwork. Getting this done regularly means you are less prone to confusion and mistakes.

6. Keep a Close Watch on Labor Costs

For most businesses, paying yourself and your employees account for seventy percent of the budget. Keep track of all benefits, overtime hours, absences, under time, night differential, etc. Your business accountant will help you calculate these, along with payroll taxes, and other government deadlines like SSS and Medicare.

7. Ensure Your Inventory Records is on Track

When you are detail-oriented, the better you can manage your business. When you are right on top of your inventory records, you deter theft. You also avoid misplacing merchandise. You prevent waste and increase your company’s bottomline.

8. Follow Up on All Invoices and Receivables

A business appraiser would advise that you must follow up on all of your invoices. Just because you sent out payment request doesn’t mean you will be paid straight away. Avoid unnecessary overtime by reminding vendors who owe you. Offer incentives for faster payment.

9. Create Financial Projections

It is vital to make financial projections to help you plan for your future. Doing so will help you figure out where to invest your revenue. You can pinpoint areas for improvement to boost your product and services. Through financial projections, you can make rough estimates where your company will be in the next month, quarter, and year.

10. Hire a Professional

Seeking the help of a business accountant will help you manage your books. Penalties for incorrect tax keeping are very high, so you need to invest in making sure this is accurate. By hiring a professional who does business accounting in Carmel, you have an ally who will help you understand the different IRS provisions concerning your business. You will also have someone keeping an eye on all the important deadlines.

Final Word

If you want your small business to succeed, you have to work hard to keep your finances in order. Your financial standing is the backbone of your business. If you have errors in your financial department, no matter how good your products and services are, your company will fail. If you don’t have one yet, get in touch with an accountant to help you get started. Use the 10 accounting tips aforementioned in this article to guide you towards making sound financial decisions.