Owning and running a business is a continuous flood of happy milestones as well as growing to-do lists. In case, you are launching your small business; you will need to control the accounting tasks, which come along with owning a business.
Accounting is a critical function of a business owner, but it need not be a cause for nightmares. It only takes a little planning and hard work to maintain your financial records.
Here are a few tips for good business accounting for small business:
- Open A Bank Account
After registering your business, you must find a way to store your business income. A separate bank account for your business will keep your finances distinct and help you while paying taxes.
Begin by opening a business checking account followed by a savings account, which will help you organize funds and plan for taxes. Next, you will consider getting a business credit card to begin building up your business credit. Such cards will differentiate between business and personal assets.
Before choosing a bank, do some serious sleuthing. Shop for business accounts and compare structures of fees. Majority of business accounts charge higher fees than personal accounts, so choose with care.
- Maintain Accurate Records
Majority of day to day accounting of your business can be maintained by online banking services, but it is good to create a single financial record of all financial data of your business.
- Track Your Expenses
Keeping track of your business effectively is the foundation for good business record keeping. It is a vital step which permits you to monitor business growth, keep track of expenses, build financial statements and help you prepare tax returns. From the launch of your business, you should set up a system for organizing crucialrecords like receipts and invoices.
Some of the expenses you must track include out-of-town business travel, entertainment, and meals, expenses related to vehicles, and receipts of home offices.
- Develop A System Of Bookkeeping
As a novice business owner, you will need to determine which bookkeeping method you wish to use: DIY business accounting software/outsourced or part-time bookkeeper/ hire an in-house bookkeeper.
- Set Up A System For Payroll
As a new business owner, it is likely that your business is a one-man show. But maybe you will have to hire a part-time employee or get someone to design your logo. But almost instantly, you will need to determine whether the individual is an independent contractor or employee. Payroll must be set up accordingly.
- Consider Import Tax
Based on your business model, you may need to import certain items for your business. As such, you will face import duties imposed by the government. So you must stay updated with various import duties and taxes.
- Sorting And Filing Of Receipts
You must keep an accurate counting and filing of receipts to avoid headaches in the long run. Receipts come in all shapes and sizes. Scan receipts onto a letter sized page and arrange them date wise to correspond to your detailed records of finances.
These tips will help you adopt best practices of accounting, which will be the key to the fortunes of your small business.