6 Essential Small Business Accounting Tips
About half of all small businesses will fail within their first five years. It’s a daunting statistic and could scare many new or prospective business owners.
But there are still many millions of businesses owners living the American dream. They do work they love, they earn a steady income running a business, and they make an impact in their local communities.
Business can work for you so long as you implement the right systems and processes from the get-go. One of the most important ways to ensure success is by following important small business accounting tips.
Accounting isn’t exciting for most business owners, but it’s at the heart of running a business. You won’t know if you’re successful if you can’t determine how much money you are actually making.
Wondering how to improve your business finances? Read on below for six helpful tips to implement today.
1. Separate Finances
When business owners first get started, they often blend their personal and business finances together. They use the same bank account and same credit cards for both types of expenses and payments.
But this makes things necessarily complicated and messy. To increase your chances of success from the start, open a separate business bank account and credit card, and do not blend accounts.
2. Track Business Expenses
The great joy of owning a business is that almost every business expense is tax-deductible, saving you money during tax season. But you need to be able to document these business expenses, which is why they should always be paid from a business-specific account.
Save all of your business expense receipts. And if you accidentally pay for these with personal funds, reimburse yourself with a check, to make these expenses documentable for tax time.
3. Track Mileage
Every mile you drive in your personal vehicle for business use is tax-deductible. Use an app on your phone to track mileage any time you are making deliveries, picking up supplies, or attending meetings.
4. Have Access to Cash
Cash flow makes or breaks businesses. Revenue may ebb and flow, but monthly expenses and payroll remain consistent. Having a line of credit available for those slower months is vital.
5. Outsource Payroll and Bookkeeping
Many owners try managing both payroll and bookkeeping themselves. But this is a waste of time for you, as you should spend your time growing your business, not managing these low-paying tasks.
Bookkeeping is a simple, yet time-consuming task that you may be able to delegate to an employee or manager within your business. Payroll is a simple service that you can automate by outsourcing to a payroll company.
6. Outsource Accounting for Small Businesses
If you really want to improve your business finances and save tons of time as well, then consider hiring an accountant. Having access to professional accounting services that allow you to call or email at any time is extremely helpful.
A reputable accounting firm will ensure your business is staying on top of its finances, prepared for anything. Never dread tax time again, and never wonder if you’re going to have enough cash to make it through the month.
Implementing Small Business Accounting Tips
There are tons of small business accounting tips that could make your business more efficient and more profitable. You could become a finance master yourself, but that would require you to take time away from more important business activities, such as marketing or developing new products.
Rather, outsource your accounting and bookkeeping services to save time for yourself, and improve your financial situation with the help of professionals.
Looking for other business tips like this? Head over to our blog now to continue reading.