Small Business: Accounting

Keeping up with your expenses and income as a small business owner is critical to determining if your are profitable and accurately complete your taxes. For most sole proprietors starting out, accountants may not be an affordable option to start. 

Here are some accounting tips to follow until your business grows the income needed to hire an accountant: 

• Separate business and personal expenses - Get a separate business bank account to track all of your financial transactions. A business credit card is handy too. 
• Create a simple spreadsheet or financial journal to record all of your transactions - Start with two primary categories; Expenses & Income. Within each category you can create additional descriptions such as; Insurance, Advertising, Utilities, etc. 
• Keep all transaction records - Receipts are the most important. You will use them to figure taxes and as to provide supporting documentation in the event the IRS comes knocking at your door. 
• Dedicate time each week to work on your financial transactions. Staying up-to-date is the best way to reduce stress during tax season. 
• Follow-up on invoices - Make sure you have a way to track when an invoice is sent, when payment is due and when the payment is received. Also, review invoices periodically to ensure they are getting paid. 
• Control your business spending - Resist the urge to spend the money you just received from a customer or client. Be frugal, making sure that any expenditures are needed, and that you have plenty of funds to carry you through the tough times. 

​There are several free accounting packages available that can help you track your financial transactions. Wave Accounting is one of our favorites as it is simple, comes preset with transaction categories, and generates excellent reports to help you complete your taxes. You can also receive credit card payments from customers and link your business bank account for complete tracking.