Regardless of the type of small business you have or plan to set up, accounting is one of the most important issues you need to stay on top. Problems in this sphere will result in a range of unnecessary obstacles and complications that can slow down the business, decrease profit or halt the development and growth of the company.
To manage accounting, you will need to evaluate and monitor the financial reports, keep track of the expenses, compare income and expenses, collect payments and deal with many other tasks. All these processes are time-consuming but don’t bring extra income. Thus, accounting turns out to be a tedious task, but if you take a closer look at it, start analysing and making conclusions, you will see its importance. The vast majority of successful entrepreneurs spend much of their time doing paperwork.
If you are tired of solving problems instead of building and developing your business, you need to find effective ways to simplify it. Rely on the experience of professional businessmen, who have faced related problems but managed to deal with them and organize quality accounting without much hassle.
Top 10 Tips for Simple Yet Effective Accounting
No matter if you are just planning your business or have already experienced the first complications associated with accounting, there are some recommendations that will help you stay organized and take the maximal advantage out of the process:
#1. Sort and track expense receipts
Keep receipts from donations and contributions as they may be needed to claim on taxes. Create a special category for this type of expenses, so it will be much easier to track the flow of funds within the sphere.
Keeping track of all the receipts is an essential part of accounting, as it is the basis of bookkeeping; though it is frequently overwhelming. Choose the right technology, take pictures of every receipt and get an automatic record of it. In a short while, it will become a habit, so you can be sure none is missing. Cloud accounting will simplify the process of recording and tracking expenses.
#2. Use quality and innovative software for invoicing
Organizing a proper accounting process is inevitable, as it can decrease possible risks and eliminate complications down the line. In the technology-driven world, selection of the right business accounting software is a very responsible task. Creating a dependable invoicing system should be the first step in the whole process. It will help you scale the growth, track the process and estimate the potential income.
#3. Reliable payroll system
Even though your company is small, you definitely have employees. Payroll is an indispensable and complicated issue of business ownership. At this point, you can simplify the accounting either by using quality payroll software or hiring a payroll company that will deal with the calculations, taxes and deposits to the bank accounts of your employees.
#4. Use compliant and secure software only
Even in case you are running a small business, you are likely to hire a third party to complete all the accounting-related issues. Make sure the data sent to the accounting software is protected by the innovative 256-bit SSL encryption, while servers are regularly scanned for vulnerability.
#5. Record taxes
This is another important part of business responsibilities. A good idea is to make taxes automated so that the system could warn you about the time tax payments are due. Make a folder for current taxes in order to collect related paperwork there. Then, when the time comes, you can just hand over the file to your accountant. This is, probably, the simplest way to keep track of all the taxes you have paid and check for mistakes or complications.
#6. Record current profit and loss
These are the two most important metrics of any business and the basis for successful work of the company. Forget about checking the profit and loss statement once every three months, but make it accessible and simple to check the overall health of your small business anytime. Cost of sold goods, revenue, operating expenses and income, net profit and gross margin should be included in the statement. These are the essential numbers you may need at any moment.
#7. Never mix business and personal life
Accuracy is an important feature of a successful business. Keep your business-related expenses and profits separately to be 100% sure the accounting and bank statements match up. Use different bank accounts for personal needs and business processes to avoid accounting mistakes and problems associated with finding the necessary transaction, etc.
#8. Create templates
A large part of the accounting job in a small business does the same thing. You need to fill in some information, collect income and expense receipts, tax details and other papers. If you get written procedures and templates, you will save your time, simplify your task and take the maximal benefit out of accurate accounting.
#9. Double-check data to ensure 100% accuracy
Properly made records are essential for correct accounting, while minor mistakes can change many indicators, creating unnecessary problems. Keep your files organized, double-check the reports before adding them to the general file and make sure the information is relevant and up-to-date.
#10. Saving time is saving money
Take several minutes or hours a month to organize financial papers and update the accounting files. It will save you hours and days at the end of the month. Moreover, you will always have accurate information about the state of things in the company. It will help you pay the bills without late fees, avoid unpleasant financial surprises and be aware of customers who owe you money. Follow these tips to make your business not only profitable but simple and well-organized.