Startups and small businesses are sources of both excitement and frustration for their owners and managers. And one of the biggest sources of the latter is accounting for all the money that goes in and out of the company. However, bookkeeping doesn’t always have to be a big source of headache for budding business owners.
If you’re thinking of ways to make your processes easier, then read on for some smart accounting tips that might just do the trick.
Separate Your Personal and Business Accounts
If you haven’t already done this, then you should get on it as soon as possible. Putting it in simple terms, mixing up your personal and business bank accounts is a guaranteed recipe for disaster. It can complicate tax computations and is simply bad for transparency. What’s more, having separate accounts also conveniently leads us to our next tip.
Record Everything Accurately
Proper bookkeeping relies heavily on accurate records. That’s why processes should be in place that allow you to correctly account for all expenses and payments. This means you should also keep and make copies of your receipts and always keep track of your invoice and their statuses. You should also make sure that your receipts are filed by either category or by date, and to ensure that your invoices always have the proper dates.
Indeed, something as simple as keeping accurate and organised records can greatly improve your company’s accounting.
Automate What You Can
Having at least one person manually overseeing your company’s finances is always a wise choice. But this doesn’t mean that it’s necessary to pore through every small bit of financial data just to keep things in order.
Sometimes, automating the fine details can help you or your accounting team function at their peak potential. And if your profit margins allow it, you can even spend a little extra money by partnering with a business advisory Perth-, Sydney-, or Melbourne-based outfit. But if you want to keep things leaner, automation can also come in more simpler forms. A good example is an applet on your phone that automatically uploads pictures of receipts to a separate accounting folder.
Make Sure Clients Pay on Time
This may sound too obvious to even say, but it can be easy to let clients off the hook when it comes to late payments. This is especially true when it comes to long-term clients. That’s why you shouldn’t be afraid to withhold services if your client is becoming lax with their payments. After all, you can think of late payments as unpaid labour that could have been spent servicing a more responsible client.
Indeed, keeping your own clients honest and timely with their payments is a key part of sound bookkeeping. It also allows you to avoid complicated mathematical gymnastics when it comes to finalising quarterly or year-end reports.
Set a Reasonable Goal
With all of the above in consideration, try to set a level of profitability that you can reasonably reach. The most important benefit is that it allows you to track your company’s growth and lets you adjust your expenditures to keep your company afloat. Generally, it’s best to keep both periodic short-term goals (such as monthly or quarterly profit minimums) and long-term yearly milestones. This should give you a healthy amount of data, along with a constant and accurate picture of your company’s financial health.
Streamlining your accounting doesn’t have to be complicated or costly. Even small but sound accounting habits can go a long way towards keeping your business’s growth on track. Keep these smart tips in mind, and your small business may not be just another startup for long.