Do you want to become better at managing business finances?
Accounting is among the most tedious part of any business. Few are willing to take on this essential task, but only some are successful enough in managing a business’s accounts. The rest often lead the business to have cash flow issues, which causes around 82 percent of small business closures.
If you want to keep your business from closing down, you’ll need all the accounting advice you can get. Lucky for you, we have just the accounting tips for the occasion. Read what we’ve prepared below and start managing your finances successfully today!
1. Keep Personal and Business Finances Separate
To become efficient at bookkeeping, learn to keep your personal and business accounts separate. This applies even if you’re a freelancer or an independent contractor. Always have an account for business expenses and another for everything else.
Doing so will reduce the number of transactions to go through in your business account. It’s a great way to lessen the time it takes for you to sort through your transactions when it’s time for a review. Fewer records also make it less likely that you make mistakes in your tax write-offs in the future.
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To prevent the co-mingling of personal and business records, open a business account as soon as you start your business. It’s a great way to help build your business’s credit rating early on.
Paying yourself a salary is another great way to write off everything as a business expense. Doing so establishes the notion that you and your business are separate entities. It makes bookkeeping easier by making one deposit into your account per month.
2. Seek Professional Help
It’s good practice to dabble in financial management whenever you can. Doing so helps you keep on top of business finances and expenses to have a good feel for your business. However, there’s no beating the experience and help provided by a professional accountant.
Accountants can help you manage business finances and help you realize the big picture. By this, we mean what you can afford to spend in the year. Professionals can also help you catch any mistake you might make as you audit your records.
Their help is invaluable if you seek to scale your business into the future. What’s even better is you have a lot of options for accountants to choose from. Right now, there are around 1,392,200 accountants in the industry, and even more fresh graduates looking for work experience.
3. Automate Whatever Processes You Can
Good accountants will also help you set up software that helps with money management. These involve spreadsheets that automatically update themselves whenever you enter new values for it to compute. Nowadays, though, accountants take automation to a whole new level.
Cloud-based bookkeeping and online banking are now essential parts of accounting. A great automated bookkeeping service will sync your software to your business account right from the get-go. This way, you can view the latest updates to your finances that will always be accurate to the minute.
What’s even better about cloud-based bookkeeping is that it saves all records online. You won’t have to worry about losing crucial financial data anymore because of this. These also go through encryption algorithms, so you need not worry about data leaks.
4. Regularly Review Your Records
To ensure bookkeeping success, always go through your accounts. Performing regular checkups helps keep bookkeeping simple. By ignoring your books, you’ll end up with a myriad of problems, like overdue invoices and such.
It’s best to allot a specific day each week for you to go over your books. You’ll keep on top of your business’s finances and customer balances by doing so.
Doing an even deeper review every quarter is also a good idea. Here, you can find out what long-term expense is costing your business more than benefiting it. You’ll also see how your sales look and what causes them to rise or fall.
Ask your accountant to help decipher these trends. They’ll help you come up with a plan to avoid losses and become more efficient in money management.
5. Track All Business Expenses
Managing finances becomes much easier if you keep track of all your expenses. Keep all receipts and make detailed lists of what you’ve spent throughout the year. It will help you see how much you’ve spent on what by the year’s end.
Through this, you’ll learn what you can afford less of and what you should spend more on. It’s among the simplest accounting tips you can do with little trouble.
It’s best to avoid using cash when doing this. Cash is easy to lose track of and is always hard to compute by the end of the day. Use a business credit card, instead, to digitize your purchases for easier recordkeeping.
6. Stay On Top of Accounts Receivable
To prevent hassles and potential losses, always keep track of late-paying customers. Missed payments can mess up the budgets of a budding business.
Give your customers a small reminder to make sure they don’t forget what they owe you. If they’re having financial troubles themselves, help set up a payment plan. Doing so will make sure you get paid while making it easier for your valued customers.
7. Never Miss Tax Deadlines
Tax bills always catch new business owners off guard. It often causes them to come up short by a few hundred or thousand dollars, which always results in a fine. They then need to restructure their financial plan to accommodate the pending expenses.
To prevent this from happening to you, plan ahead. Set aside money and pay on time to avoid facing fines. You can sync your calendar with IRS’s tax calendar for businesses so you won’t miss a payment.
Use These Accounting Tips Today
Keep your business expenses and affairs in order with good bookkeeping skills. Use these seven accounting tips to make sure you never miss a beat and always keep a record of your finances. Get better at money management and lead your business to success today!
Do you want to learn more about financial management? We have more guides to help you out and keep you updated on the latest trends within the industry. Check them out and learn a thing or two today!