Are you a small business owner who struggles with accounting? Do you feel like you're constantly playing catch-up with your finances?
You're not alone. Many small business owners have a great vision for their ventures, only to meet challenges in bookkeeping and accounting.
Don't let this keep you from succeeding; there are many ways to make accounting for small businesses a lot easier. So in this post, we’ll give you ten tips on how to do just that. These steps are doable, and you will surely be on top of your small business accounting in no time!
- Business is business.
One of the first pieces of advice seasoned business owners would tell you is to treat a business as a business. What they mean by that is to always be objective and act not according to your personal feelings only.
In terms of finances, the first step to treating a business as a business is having a separate bank account for your personal spending and for your business spending. Be strict about not interchanging the use of money between the two accounts.
- Link bank accounts.
Link your business bank account to your accounting software. Doing this makes bank payments convenient for customers who opt for them. When your customers pay or you make any payments and withdrawals, the transaction is automatically recorded in bank statements and the books. Fraud is also less likely to occur because your bookkeepers can easily raise the alarm when data don’t match.
- Automate invoicing.
Monitoring receivables (payments from your customers) is one of the many accounting tasks you should do as a small business owner. It may be easy to do manually at first; however, it is best to automate this when your customer base grows.
With the help of software, you can automate invoice generation, set payment reminders, and add a “Pay Now” button to make everything convenient for you and the customers.
- Invest in paper-to-data software.
Another way to save time and effort is to invest in software that generates data from paper receipts and documents, such as A2X, Dext, and Hubdoc, and incorporate them into your accounting system.
Integrate your receipt management software to your accounting software, and the transaction will automatically be categorized into your books. The software will store and organize the receipts you’ll collect as you purchase supplies and pay for operating expenses. And whenever you need them, you can just pull up the data.
- Make and collect payments on time.
When you have set up bank linking, invoicing, and receipt management for your business, making and collecting payments on time will be easier. You can give your customers discounts and incentives to encourage them to pay in advance or on the due date. Through timely payment, the data you can generate from reports will be accurate, and cash flow management will be easier.
- Forecast and plan your finances.
Forecasting and planning your transactions instead of just recording them as they happen is a must. As a fledgling business, you need to keep your records even from previous years as they will come in handy in planning finances for the coming year. Through historical financial data, you can project possible income and expenses. As a result, you can budget your money for the year and break it into quarterly, monthly, and even weekly allocations.
- Check your expenses and plan to lower them.
For a business to grow and last long, profitability is essential. Hence, check for expenses that you can still lower while maintaining the efficiency of your operations.
Most of the time, human resources take a huge cut on the budget. You can validate this with the help of the time tracking feature available on your accounting software. This feature also helps when you outsource staff to save costs.
- Keep your books updated and organized.
One huge mistake of many small business owners is forgetting about the books and remembering them only when tax season is near. This practice may work for many, but the disadvantage is that you won’t see your business's financial status in real time. Thus, you cannot adjust any plans or create new ones to ensure you achieve your target earnings. So go down the less-traveled path and keep your books always updated and organized.
- Conduct regular financial health checkups.
Financial health checks are a time for your team to analyze the current health of your finances, identify areas for improvement, and pinpoint best practices to continue.
Ask your accountant to create easy-to-understand reports featuring detailed charts and breakdowns of your business's key performance indicators.
- Balance sheet
- Cash flow statement
- Income statement
- After-tax income
- Accounts receivable and payable
- Different expenses
- Work with finance experts.
Here’s our last but not least tip. To make bookkeeping and accounting much easier, you can always hire small business accounting services. Partner with trained bookkeepers and accountants to handle your business finances. Hiring an in-house team works too, but if you want to save cost while receiving the same quality of work, partnering with reliable agencies is the way to go.
Partner with Unloop!
So there you have it—our top ten tips on how to do accounting for a small business the easier and more efficient way. We hope these tips have made you feel more confident in handling your business finances.
If you ever need a hand with accounting, don’t hesitate to reach out! We at Unloop are passionate about helping growing businesses and making them succeed through our bookkeeping, income tax, and sales tax services.
Just give us a call at 877-421-7270. We’d love to help you!