As a small business owner, when it comes to running your business, you wear a lot of hats. You handle staff, work on new ideas and prospects for business, and ultimately make sure your customers are happy! The accounting for your small business is one of these (and many more) important responsibilities Probably one of the most impactful tasks you can have as a business owner is monitoring the finances of your business, as money can truly make or break the success of your small business.
Yet accounting effectively isn’t a simple task— especially when finance isn’t your primary background Successful accounting for small business involves a lot of planning and a process knack. There’s more to accounting than just keeping tabs on your cash flow, from building profit and loss statements to preparing for the tax season. Lets dive into 7 best practices for successful small business accounting.
- Keep an Organized System in place
- Separate Business and Personal Accounts
- Prepare for Unexpected
- Inventory = Money
- Be Smart about Labor Costs
- Establish a Minimum Monthly Profit… and Budget!
- When to Call a Professional
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Keep an Organized System in place
Whether tracking numbers is your strength or just holding your bank account in the green, organization is crucial to efficient small business accounting. Usually, small businesses have several accounts to keep track of, so things can easily get messy. Minimize the assets used by your accounting books by switching to a centralized repository to handle your business accounts.
Most accounts payable (and possibly your own invoices) are billed electronically to clients, which can make monitoring accounts payable and receivable simpler than the old days of bookkeeping with pen and paper.
Having a single system like Nuage Pulse, that allows you to get an overview of all your bank accounts and balance sheets— and access them from anywhere is not just the path to the future, but a requirement for small businesses. One simple step can save you a ton of time looking for actual transactions in your books and even make budget choices simpler if all the numbers are right in front of you. Successful small business accounting requires accuracy and serious organization, so set up yourself (and your business) with the right tools to help you stay on top of your finances for success.
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Separate Business and Personal Accounts
If you run your own business, it’s easy for the lines to blur between what’s yours and what belongs to the business. But it is important to distinguish business and personal expenses to manage your finances correctly.
Having your personal bank account and company bank account separate will help you keep numbers stable and also help ensure that when you claim tax deductions for your business, you are compliant with the IRS.
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Prepare for Unexpected
While funding for small businesses can be limited, it can be extremely beneficial in the long term to be prepared for unexpected major costs. If there is one lesson that is common to all business owners, it is that the rule of Murphy is very true. It seems that once an additional expense is incurred— like a new computer or a fixed facility, there are plenty of other expenses that also come down the pipeline.
Being prepared for these expenses can help you avoid applying for a quick cash loan or ending up in debt with your credit card.
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Inventory = Money
Whatever sector you are in, there are certainly plenty of tools and supplies to keep your business going. You may be in the restaurant industry and have to control food costs; or you are in the property management sector and have to keep track of office supplies. Whatever you’re specializing in, you probably already know how important it is to manage your inventory expenses. Maintaining a plan for managing your money and ordering new items will help you identify areas where your spending can be reduced and optimize your cash flow.
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Be Smart about Labor Costs
Employee management is one of company operation’s most challenging aspects— no matter how many people you employ! To balance your books and keep your company competitive, keeping tabs on overtime, wages and other related costs is critical. Tip for Small Business Accounting: Hire a HR professional or accountant to manage your payroll and work towards more effective employee management.
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Establish a Minimum Monthly Profit… and Budget!
One of the most important steps that business owners can take to improve their small business accounting and financial status is to develop a budget for your business. What’s involved in creating a solid monthly company budget?
- Profit and loss statement
- Financial statements
- Variable expenses
- Fixed costs
It’s hard enough to build a budget, let alone to make sure you follow the financial plan. Hiring outside accounting services for small businesses is a great way for small business owners to keep track of their finances, make plans, and still have the flexibility to concentrate their attention on other important business fields.
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When to Call a Professional
You have plenty of duties to perform, to put out fires, and to boost revenue. If you are unable to give your full attention to accounting for your company, you may want to look at some options for outsourcing financial services.
Nuage Digital offers industry-specific knowledge and expertise in bookkeeping and accounting services to small businesses. With Nuage Digital’s accounting services, your small business has a dedicated financial expert accounting team here to help you manage your revenue, plan for tax time, and set you up for profit and business growth.
With a pair of extra hands to help manage the financials of your start-up or small business, owners will feel empowered to focus on things like going forward with new ideas and working on ways to grow the network of their business.
