Did you know that the US houses 664,532 active certified public accountants? That’s right. What’s more, this doesn’t even include the 1.73 million bookkeepers currently operating in the US. These numbers tell you that you have many options if you need to hire an expert to help you with accounting tasks in your small business.
However, this doesn’t mean you should hire one right away. This is especially the case since there are many accounting tips that even beginners can follow on their own. Plus, learning basic DIY accounting helps you hone your business money management skills.
So are you ready to straighten out your business finances and keep accounting headaches at bay? Then keep reading this guide to accounting to learn the most important tactics.
1. Record and Track All Your Business Expenses
Let’s start with one of the most important bookkeeping tips: daily expense tracking.
Bookkeeping, at its core, is the process of recording and tracking all transactions. It’s best done daily, especially for businesses with many variable overhead costs. Recording these on a day-to-day basis helps you avoid discrepancies in your books.
For one thing, you might end up forgetting to record, say, meal and transportation costs. Second, recording regularly allows you to tally your balances every day. This then gives you the chance to see accounting errors right away and correct them ASAP.
Below are some of the most important business transactions to pay close attention to.
Record all business purchases, such as office supplies and equipment, as soon as you make them. Keep the physical receipts while also making soft copies.
Your salary, as well as the those of your employees, can account for as much as 60% of all business expenses. Therefore, while the base salary is a fixed amount, there are many extra variables to account for. These include overtime pay, under-time deductions, and perks, among other benefits.
Therefore, you should monitor these transactions daily, as you would other expenses. You can use time-tracking software to capture working hours as well as overtime. The best time trackers even come with payroll-calculating features.
Other Overhead Expenses
Track everything else your business spends money on, such as advertising, insurance, and rent. Be sure to account for office and equipment repair and maintenance, too. You should also tabulate your electricity, water, phone, and Internet bills.
2. Organize Your Accounts Receivable and Payable
Running out of funds is the second most-cited cause of start-up failure in the United States. This can arise from overspending, failure to track cash outflows, or both.
As such, it’s vital that you stay on top of your business accounts receivable and payable. Otherwise, you could end up being short on funds if a client doesn’t pay up or if you failed to prepare for a pending payable.
Keep Track of Accounting Due Dates with a Calendar
You can keep track of these accounts by setting up a calendar and noting their due dates. Set reminders to notify you a few days before the actual due date. This way, if a client hasn’t paid yet, you can send them a friendly reminder of the balance due.
Monitoring your ARs and APs also gives you an idea of cash inflow for certain date ranges. It allows you to see if you’ll have enough funds to cover expected costs after that date range.
3. Automate Some of Your Administrative Accounting Tasks
Make your accounting responsibilities easier to fulfill with automation software. Rather than manually calculating your income and expenses, use these programs instead. With their computing power, you can say goodbye to data entry and calculation errors.
These programs also allow you to automate payments for fixed expenses. You can also integrate them with certain time-tracking programs for invoicing purposes. You can even set automatic payments for variable costs like utilities and salaries.
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These are only some of the accounting tasks you can automate, but these alone can save you a lot of time. Plus, automating helps you prevent costly human errors, like miscalculations and redundancy.
Now the big Q is, what is accounting software that you can use for these tasks? QuickBooks, Quicken, and FreshBooks are just a few of the most popular ones. However, be sure to compare their features so you can figure out which one offers the most capabilities you can use.
4. Know When to Seek for Professional Accounting Help
“Should I hire a bookkeeper or CPA even if I plan to use accounting software?”
That question likely popped into mind after learning what automation software can do. The answer is, it depends. However, you should hire these trusted experts if you have issues like IRS bank levies.
It’s also best to outsource accounting services even if you only use them a few days per month. For instance, you can hire them during the last week of the month to check your books and keep them accurate. These pros will ensure that your balances tally and that there are no discrepancies.
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You might also want to outsource tax-related concerns to a professional accountant. Aside from helping you with tax filing, they can also give you insight on strategic planning.
By outsourcing only certain accounting tasks, you can keep your overhead expenses low. For example, the average salary of an accountant in the U.S. is about $65,000. So you probably don’t want to have an accountant’s salary on your payroll!
5. Plan and Prepare for Huge Expenses
Don’t let sudden equipment failure shock you and your business finances. Always prepare for problems like computer breakdowns and heating/air conditioner failure. You should also account for repairs for a faulty business car or a leaking office roof.
By preparing for these “unexpected” expenses, you can keep cash crunches at bay. Therefore, set aside emergency funds for these situations and avoid being caught in a pinch if they do happen. Even if they don’t, you can use your emergency funds for other important expenses.
Follow These Accounting Tips Now to Keep Your Business Finances Healthy
As you can see, small business accounting isn’t rocket science, nor does it have to be a pain. So long as you follow these accounting tips to a T, you can keep your business finances intact and even grow it. Moreover, you can avoid getting into trouble with the IRS, which can hurt your business.
Ready for more tips and tricks that can improve your business cash flow? Then don’t forget to bookmark our site so you can quickly check back in for more.