14 Best Accounting Tips for Small Businesses and Startups

Being organized from the beginning saves everyone a world of trouble. You don’t need to be tech-savvy to be able to use cloud-based accounting software. It has a shallow learning process and any contractor who wishes to handle the software on his own can do so easily. Creating audit trails in accounting can help your business prevent fraud, improve accuracy, and find missing transactions. To ensure your small business accounting records are as accurate as possible, consider keeping an audit trail. But what if you need to come up with a down payment for an office or need to purchase new equipment and software to help you build your business? Planning for major expenses can help you best utilize the business credit and resources available to you while giving you peace of mind.

But it doesn’t just save them hassles—it also makes your life easier by automatically tracking overtime, PTO, etc. You can find time tracking software designed for just about any industry. Choose one that works with your bookkeeping software, and payroll will be a snap, too. Now, even a small error or oversight can impact your P&Ls,Income Statement, revenue projects — and snowball into a big end-of-year mistake that affects your payroll and taxes.

Hire an accountant and bookkeeper

In some cases, separating funds is not something your business can opt out of. If your business is an LLC or a corporation, you must open a separate account for business.

• One surefire way to develop a keen understanding of your business’s financial health and forecast its future is by analyzing your financial reports.
• Quick, regular audits of your documentation and transactions will ensure that you’ll never have a stressful night’s sleep—at least as far as your books are concerned.
• Ensure compliance with all relevant legal and regulatory requirements, such as registering the business and obtaining necessary licenses and permits.
• Expect that prospective investors in your company will ask questions about the market opportunity and your competitors.
• Small business accounting is about tracking the revenue and expenses of the business account.

Manual bookkeeping is however prone to errors, and also eats up a lot of time and energy. But automation tools can keep tabs on your books and maintain the records with unrivaled accuracy and speed. The word automation has been rattling the whole world for the last decade. Some years back, automation was only reserved for big enterprises. But today, half of the small businesses have automated workflows from customer management, marketing to collaboration tools to use within teams. In such a scenario, you can automate your bookkeeping, so that your numbers flow intact into your accounting software.

Utilise apps and software to track expenses

Make sure to read online reviews, compare different pricing options, and see which features are included in the service. You might choose to invoice at the end of each week but don’t leave it any longer. In fact, a good proportion of people pay as soon as they receive an invoice, so the sooner you ask, the sooner you’re likely to be paid. Taxory is a small business accounting firm providing accounting services in Mississauga, Ontario and the rest of Canada.

• Knowing when invoices should be paid and how that impacts your cash flow is critical to making future business decisions.
• It may struggle with a poor credit score, lack of funding, or difficulty fulfilling its working capital needs.
• Realiaproject.org, which creates templates and forms for businesses and academics.
• Also store receipts (paper-based or digital, depending on your system) as proof.
• Accounting and bookkeeping can be complex, time-consuming, and tedious.

Unexpected expenses always come with business ownership and having emergency money will make it less painful. Keep Your Personal and Business Expenses Separated – When storing your receipts, it is a good idea to keep at least two separate containers. One container should be for your personal expenses and another for business purchases. This will make the sorting process much easier later down the road. Common bookkeeping errors include transposing numbers, entering data in the wrong account, adding or leaving out digits or decimal places, or duplicating and omitting entries. The small business bookkeeping tips above help to minimize these errors.

Outsource your accounting and bookkeeping functions

Although most businesses start with basic accounting software, as they grow and become more complex, they may need to invest in an enterprise resource planning system. Once a company has an ERP system, it can add modules for other business functions, with everything tied to a single database. Bookkeeping is the organized process of tracking all income and expenses. It’s a critical component of financial management that ensures business owners have the information they need to make sound business decisions.

Well, this can prove to be disastrous come tax season when you would have poor or no record of your business transactions to show for write-offs and other benefits. The only way to sidestep this financial landmine is to separate your personal and business finances from the get-go. Never mix the two up, it will make your accounting much more difficult to handle. It’s a lot easier to keep accurate records if your only dealing with one type of account, so stay organized. You will save a lot of time by keeping these accounts separate as well. When accurate financial reports are so readily available, it only makes sense to check them routinely in order to take the temperature of your business. Consider adding this as the final task on your weekly bookkeeping check-in.

Track business expenses

You can have different staff classifications, such as employees and contractors, but it is important to identify each staff member properly to maintain the accuracy of your financial books. Discover the products that 33,000+ customers depend on to fuel their growth. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

Without keeping the books current, owners and employees don’t have a clear picture of the company’s financial state. Automating receipt and invoice capture is one way to ensure the books are always up to date. Another important step is to link bank accounts with your accounting software. The business can define bookkeeping tips the matching rules in their system to reconcile the statements, which makes the reconciliation process much easier. Many small business owners use the same bank account and credit card for their business and personal needs. If you go this route, there’s a good chance you’ll overlook vital business transactions.

Why do many small business owners need accountants?

This is especially true if you work in a highly competitive industry and are unable to take advantage of a golden opportunity simply because you do not have enough capital set aside. These platforms have built-in templates that allow you to easily input and track basic items, such as invoices, deposits, and check printing. By keeping your files digital, not only do you save a few trees, you also reduce the risk of physical copies being ruined by flood or fire. Good bookkeeping can prove to be the success ingredient your small business needs. We advise you to carefully consider the tips we have described above and start implementing them to defend your business from unnecessary loss. Another reason why you should track your expenses and income is to get clear insights into your spending and earning patterns. Only when you have the numbers in front of you will you know whether you are breaking even or overspending.