When you run a small business one area that many do not enjoy to do but is vital to the on-going operations is accounting. It can often be tedious, boring and isn’t what you imagined your time would be spent doing when you started your business.
Regardless, it still needs to be done, but there is help at hand!
The following list of hints and tips will hopefully help you reduce the stress and time it takes to do your accounting and make it much less of a chore.
1. Keep Records of Everything
It is extremely important to keep good records and be able to trace all aspects of the companies spending. All business transactions need to be recorded, no matter how inconsistent they may seem. When it comes to filing your tax return at the end of the tax year, having all this information on hand could help the company save a substantial amount of money on allowable expense deductions against your tax bill.
You also do not necessarily need to be keeping boxes upon boxes of documentation, many accounting software packages will be able to track transactions and records. This will ensure no important paperwork disappears when you need it most.
2. Meet The Accounting Deadlines
Deadlines, especially related to tax if failed to be met can result in substantial fines. You do not want to be at risk of being hit with further fees or fines which could have been avoided. Small businesses often run on tight margins and cash flow can be often a problem. Therefore do everything properly and when you are meant to do it, in extreme scenarios failing to do so can result in the liquidation of the company. An accounting deadline should be met with a priority and when combined with good record keeping becomes much easier to meet.
3. Use Accounting Methods to Look to the Future
You probably understand the key importance when it comes to planning. Be it for a marketing campaign or a product launch. However you should not ignore the importance of planning ahead accounting-wise. Through a range of cash flow forecasts, product pricing models or estimated sale figures you can better plan the finances of the company. This will help the long term survivability and ensure you can maintain a healthy profitable company.
4. Use accounting apps
Perhaps it sounds like a silly tip, but there are still business owners out there who do accounting using pen-and-paper. I’m not joking. Even those who are using digital means for their bookkeeping and accounting purposes, they ‘trapped’ in spreadsheet software – MS Excel and Mac’s Numbers. While those kinds of software are powerful, those are certainly not for proper accounting.
You and your business deserve more than pen-and-paper and spreadsheet software – look for accounting software, preferably those which service is provisioned online (or ‘in the cloud’) – such as Quickbook, Xero and Freshbooks.
5. Don’t Be Afraid to Get Help
Accounting can be complex and hard to understand so you should never feel like you have to do it yourself. While an accountant can be expensive, the opportunity cost is often greater. Also accountant fees are often tax deductible, reducing the total cost come end of the tax year.
You didn’t go into business to worry about adding up numbers, you did it to provide you do best, so sometimes taking a step back and focusing on your core work is worthwhile in the long run.