Wouldn’t it be nice if you had the secret to bookkeeping for small business success? It turns out that it’s not just one thing but several that you need to do to ensure that your business stays in the black. If you’re not up to the bookkeeping task yourself, make sure that you hire someone to keep up with finances immediately after launching your business. You don’t want to deal with not having your finances in order come tax time or not having a clear idea of what’s coming into and out of your company even if someone else keeps the books.
Separate Your Personal and Business Accounts
This is often the first thing that business accountants mention to their clients because it’s just that important. It can be tempting to mix your personal and business financial accounts when your company is small or when you’re just starting out, but it can quickly turn into a giant headache. You can avoid tax and other hassles altogether by opening a small business checking account as soon as you officially launch your company. Opening a separate business credit card is a good idea as well since it helps you to establish a credit rating independent of your personal name.
Track Every Business Expense
You will need to keep a receipt and a detailed description of anything you plan to deduct as a business expense on your annual tax return. Rather than stuff your receipts in a drawer or file cabinet, scan them to your computer as soon as you receive them. You should be able to find a free smartphone application for this purpose. Additionally, it’s ideal to avoid cash and use your credit card instead for business purposes. Not only will this help to improve your business credit rating, the card issuer will likely issue you an itemized statement as well. This makes it easier for you to know exactly where your money goes.
Know When Customers Pay Late
A company can’t remain financially healthy when customers chronically pay late and interrupt its cash flow. It’s important as the business owner to have a good idea of which customers owe you money and when you should expect payment. When a customer goes past due, contact him or her to see what’s happening. Don’t hang up the call until you can work out a payment arrangement if the customer appears unable to meet the current obligation.
Take Advantage of Automation
Thanks to the availability of cloud-based programs, bookkeeping isn’t the tedious and time-consuming chore that it once was. When you use a cloud-based program, you don’t have to worry about the loss of critical and sensitive data if your computer crashes. You simply logon to the website hosting the bookkeeping program and retrieve it. Online banking simplifies your life as well because it gives you the option of syncing it with your online business financial software.
These are just four ways to stay on top of your business finances. You will likely discover more the longer you work with your books.
You can use all the help you can get to run a small business successfully, and Doerhoff & Associates is here for you. We strive to provide what you really want and need – a unique and customized set of services to fill the gap and support you, the business owner.