When you dreamed about launching a small business, you probably didn’t envision the reality that you’re experiencing today. In the beginning, there’s a lot of hard work and uncertainty. In fact, nearly 20% of small businesses never make it past the first year.
On top of managing your staff and marketing your business, you also have to stay on top of your small business accounting. This is easier said than done. Yet, it is one of the most important aspects of being an entrepreneur.
But don’t worry, we’re here to help. Keep reading for our top four small business accounting tips to improve your financial management.
1. Separate Your Personal And Business Accounts
First and foremost, do yourself a favor and separate your personal accounts from your business accounts. This will make your life ten times easier. Opening a small business bank account will also simplify your life when it comes time to file your taxes.
This means adding yourself to the payroll and cutting yourself a check each pay period. Though this may seem like an unnecessary step, keeping your business and personal accounts separated is essential. Look for the best business accounts for small businesses offered by local and online banks.
2. Keep All of Your Receipts
Next, if you want to be well-prepared for your year-end taxes, you need to keep all of your physical and digital receipts. You can save a substantial amount of money by writing off your business expenses at the end of the year. However, you’ll need documentation to prove you paid for those expenses if you want to reap the benefits.
To optimize your small business accounting, we recommend creating a physical and digital filing system to document all of your expenses.
3. Update Your Earning and Expense Reports Weekly
One of the main reasons businesses go under is because their owners don’t keep track of their finances. This includes expenses and earnings. At all times, you need to be in the know about your cash flow.
Create a spreadsheet and document every penny that comes into your business. Just as importantly, you need to note all of your expenses. Your expenses should be separated into the appropriate categories, such as:
- Material/product costs
To avoid falling behind on your reports, make it a habit to update them every week. This will help you stay organized. Just as importantly, regular documentation will make it easier to identify issues and come up with viable solutions.
4. Automate Your Invoice Process
Finally, you can make your life easier by streamlining your cash flow system with small business accounting software. For example, automate your invoice process with an online invoice maker.
As soon as a customer or client purchases a product or service from you, it should be documented in your system. It can be added to your earnings reports where you can transfer the data to your spreadsheets.
Want to Improve Your Small Business Accounting
Managing a small business is far from easy. Even if you love what you do and enjoy working with customers, it can still be stressful at times. Learning how to improve your small business accounting process can make a big difference.
It’s okay if you need more help. Hiring small business accounting services may be exactly what you need.
But if you’re looking for more small business tips or financial advice, look no further. Our blog has tons of content created to help entrepreneurs like you. Check out some of our other articles before you go.