Here are 7 accounting tips to help you manage your books:
1. Get to know your cash flow
Most accounting tips for entrepreneurs cite getting to know your cash flow as a top priority. Even for personal finance, you have to know where the money you earn is coming from and being spent on. Apart from knowing all where the income is coming from, you must write all the costs from rent to utilities. Don’t forget to include supplier payments and loan repayments. Keeping organized will prevent blunders and prevent mindless spending.
2. Open a bank account for business
All entrepreneurs must have a separate business checking and savings account. No matter if it is a small home-based business or mid-sized enterprise, keeping your business account separate from your personal accounts will save you a load of trouble in the future. Being unable to keep your records straight for the tax authority may result in a time-consuming audit with stiff penalties.
3. Keep track of everything
You must prioritize documenting all your internal processes. You and your team must have internal processes in place to make it easy to cross-check where everything is going. When you are organized, it is much easier to spot inconsistencies. You will be able to identify where you are losing money or wasting time. When you have internal processes in place, it is also easier to reconstruct processes in case one of your staff resigns all of a sudden.
4. Invest in smart solutions
If you and your team are still relying on manual accounting for small businesses, it is time to ditch paper. Even your Excel spreadsheet is not enough to help you manage your business efficiently. You need reliable accounting software to accurately and seamlessly record your financial data. There are many free trials out there, so you can find one that best suits your needs. Automating means reducing errors, which saves time, energy, and money.
5. Use online invoicing and e-payment
Consider online invoicing with electronic payment to bill clients seamlessly. This makes it easier for your clients to make timely payments, paving the way for better fund management. It also makes more sense to set-up an automatic debit e-payment for recurrent bills to avoid missed due dates. Failure to pay on time equates to late payment penalties. Leveraging tech means making your money management easy and efficient.
6. Use the right card
When it comes to personal and business expenses, aside from keeping them separate, you must use the right credit card. Find one that has great privileges, perks, and bonuses that will incur you more points and savings. Some even provide travel insurance and purchase protection.
7. Rely on professional help
It may cost a small retainer fee to hire a professional accountant, but this service gives you excellent value as you can focus on growing your business. Taking advice from a licensed practitioner can help you take advantage of tax credits or tax differential plans. With the right help, you’ll be able to maximize your deductibles, helping you save more.
Staying on top of your accounts and books will take work. However, following these accounting tips and staying consistent, you will save yourself from future headaches. Being vigilant about your finances means you can make your life easier and add value to your business.