Essential Small Business Accounting Tips
Starting a small business requires creativity, vision, courage and a ton of hard work. Making your small business successful requires all those things, plus a sharp-eyed approach to accounting. Poor accounting practices can keep your small business from growing, or torpedo it altogether. While you keep one eye on your company’s bright future, strengthen your financial present with these small business accounting tips.
- Evaluate Your Accounting Software
Is your accounting software working for you? If you can’t immediately answer that question affirmatively, it’s probably time to do some assessing. The market is flooded with small business accounting software, so there’s no need to settle for a product that’s not user friendly, doesn’t have the tools you need, or delivers reports in a confusing way.
Does your software make it simple to track how much money is coming in and going out of your business each day? Are you able to quickly import new client information and generate invoices from the software? Can you easily access data from your mobile devices? Does your software make tax compliance easier or harder? These are just some of the questions to ask yourself and anyone else on your team involved with your business’s accounting.
- Tighten Your Policies Around Invoices
Your approach to invoicing can affect every element of your business. Small businesses can’t afford to let unpaid invoices stack up. For the sake of maintaining healthy cash flow, ask yourself if you need to get tougher with customers. If you haven’t already, think about establishing a strict policy against providing further goods and services until outstanding invoices are paid. Do you set payment terms for invoices, including late fees? Do you enforce those late fees? Is your due date window too broad, giving clients 45 or 60 days to pay invoices? If so, shifting to a 15-day window might improve cash flow. Even making small changes to your invoicing policies can give you more breathing room.
- Systemize How You Handle Receipts
For a small business, old receipts are kind of like fire extinguishers. You might never need them, but if you do someday need them, you’ll be sorry if they’re not around. Keeping all your receipts may prove useful if you’re ever audited, if you find discrepancies in your books, if you need to settle disputes with clients or vendors, or in any number of other circumstances.
At the same time, you may not want to fill a storage space with boxes of old, disorganized receipts. Your accounting software, or a receipt tracking app, can help by making it easy to scan or upload photos of receipts and sort them into categories based on expense type. Create a policy requiring receipts to be entered as soon as they’re generated, making it easy to track expenses in real time and limiting the possibility of physical receipts going missing or getting destroyed by spilled coffee.
- Schedule Regular Accounting Check-ins
Small business owners have to keep a lot of plates spinning. The things that don’t require your immediate attention can get pushed aside. Reviewing and tracking your accounting outcomes is one of those things that tends to get overlooked until the end of the quarter. If there are discrepancies in your books, or unpaid invoices that have slipped through the cracks, those are things you want to know about right away. So schedule a standing 10-minute block at some point in your weekly calendar for reviewing financial statements, new bills, cash flow and anything else that affects your financial health. You’ll be able to spot and address minor problems before they become big problems.
- Consider Outside Help
If your business is growing, you can expect some growing pains. Part of making the right decisions for your company is knowing when to ask for expert help. As your profits and client base grow, your accounting needs and tax obligations will inevitably become more complex – and relying on software alone to help you stay on top of everything is risky. That’s especially true if you don’t have a dedicated accounting professional or bookkeeper on the payroll. Soliciting the regular input of experienced accounting professionals allows you to shift some of the burden off your shoulders, saving you time and energy that you can use to focus on your business’s next chapter.
These small business accounting tips may help you shore up your finances in the present, but if you want your business to be thriving 10 or 20 years from now, you may need professional support to get you there. From making software recommendations to planning tax strategies, Sachetta Callahan provides a full range of accounting services to position small business owners for future growth. While you work to move your business forward, we’ll work behind the scenes to help you to make it happen. How can we lighten your accounting load? Get in touch to learn more.
by Stephen Sachetta, CPA, MST