Small Business Accounting Tips

Take time to tune-up your accounting practices with these tips: 

• Separate personal & business expenses - You may have started your business paying the initial expenses with your own dollars. As soon as possible, if not at the very beginning, establish a separate account for your business. Need to use personal funds for the business? Deposit them in your business account for tracking purposes. Get a business credit card to help track your business expenses as well. 
• Spend time each week reviewing your accounting - Schedule time, usually at the end of each week, to focus on your accounting to include; following up on outstanding invoices, collecting/filing receipts, filling in your accounting spreadsheet, and reviewing your transactions. Remember that ink cartridge you bought when you were shopping with the family? Include the receipt in your files. (Remember: even small expenses add up in a year.) Mid-year take a look at your accounting practices and ensure you are prepared for tax season. This reduces the time and stress when tax season approaches. 
• Forecast expenses at least once every two months - It is important to look at your future expenses to create a plan. Consider that your computers will have to be replaced, or you will need additional supplies to prepare for projected increased sales due to seasons. Consider there are times when costs for materials are cheaper during the year. This is a great time to stock up and save dollars. Reviewing/forecasting your expenses is a great way to remind yourself when you need to save and when you need to invest -- it's strategic planning. 
• Keep your accounting practices simple - Don't complicate your accounting practices. Not comfortable with a computer? Use a ledger book to track income and expenses. Using your business bank account is a great option as long as you make sure that all income and expenses are paid through that one account. This ensures you have accurate records of your financial transactions, helping you keep an eye on your bottom line. Use basic categories for income and expenses. For example: Income- Customer payments; Owner investment. Expenses - Operating expenses; Advertising; and Maintenance. 
• Be consistent!!! - Making time each week to work on your accounting, using consistent methods to pay and categorize expenses and receive customer payments will help you stay ahead of the accounting game and when tax time comes, you will be well prepared. 
• Get Professional Help - You can employ an accountant to help you at tax time, or contract an accountant to help throughout the year. Be selective about who your accountant is and make sure they have experience with small businesses. The best practice in selecting an accountant is to identify 2-3 possible candidates and interview each before selecting one. Consider their experience, but consider how well they communicate. You need to feel comfortable with your accountant. 

Maintaining your accounting practices, ensuring that you account for every dollar coming and leaving the business will help you operate your business more effectively and efficiently which will increase your bottom line. 

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