Small Business Accounting Tips: How to Keep Your Books in Shape
Starting a small business requires taking a certain leap of faith. After all, only half of all small businesses survive the first 5 years. One thing you can do to help increase your odds of success is to make sure you have a solid understanding of small business accounting before getting started.
Continue reading this short guide to small business accounting to learn the most important things to know to keep your business in the black.
Don’t Mix Your Personal and Business Finances
If you take nothing else away from this article, the most important thing to remember is that your personal and business finances should always be separate. When first starting your business, open up a new bank account for all of your business transactions. By setting it up this way from the beginning, you’ll make things much easier on yourself.
Remember to Budget for Taxes
When your business first starts making money, it’s an exciting feeling! However, keep in mind that, unlike when you work for someone else, your taxes aren’t coming out automatically. As a good rule of thumb, set aside at least 30% to go toward taxes every time you make money so you aren’t left with a shocking tax bill at the end of the year.
Talk to Tax Professionals
Speaking of taxes, it helps to work with a professional when you’re first getting started. They can help you navigate confusing tax rules to help you determine what you need to pay.
If you do run into a tax issue down the line, don’t try to navigate it on your own. Instead, contact an experienced tax attorney with a high success rate to help you overcome the issue.
Automate What You Can
When it comes to small business finances, the less manual work you have to do, the better. Finding great accounting software can help automate certain tasks to make your life easier. Look for software that can connect to your business bank accounts, track your income and expenses, and categorize transactions automatically.
Take it a step further by choosing software that also has built-in invoicing and reporting so you can do all of your critical accounting tasks in one convenient place.
Set Aside Time for Accounting
Perhaps the most important of our small business accounting tips is to set aside dedicated time to update your books. Blocking out time on your calendar every week or two will help keep you on track. This helps prevent a scramble to get caught up on a year’s worth of accounting come tax time.
Simply put, the more consistent you can be with your accounting tasks, the less likely it will be for you to run into issues with your books. As a result, you can focus more time and effort on the other aspects of running your business.
Follow These Small Business Accounting Tips
After reading through these small business accounting tips, we hope you feel more prepared to start your own business off on the right foot. Setting a solid foundation for your business now will help set you up for future success.
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