Small business owners often need to wear many hats. From launching a new product to hiring new employees and promoting business websites; they have so much to tackle that relatively less-glamorous yet important tasks like accounting and bookkeeping often take a back seat. But if you ignore your accounting tasks, your business can sink before you even notice that. Thankfully, nowadays you can use cloud accounting software to automate most of your accounting tasks and get a clear picture your finances anytime and from anywhere. Not forgetting, there are many benefits of cloud computing. Here are some useful tips on how to get your small business accounting in order.
Top Accounting Tips for Small Businesses
Keep your personal expenses separate – If you do not have a separate bank account for your personal expenses, open one. Consider using multiple bank accounts and credit cards – each for a different purpose. Otherwise, you may end up using your business credit card for your personal expenditure or vice versa. Of course, you can pay back later to get things in order, but it would be a time-consuming task. And chances are that you’ll find it difficult to separate your business expenses from your personal expenses after a few weeks.
Keep a ledger – In other words, keep track of all your business’ expenses and income. Document all financial transactions, including every small purchase made and every dollar earned on a daily basis. One way to keep a ledger faster and in a more efficient way is by using cloud accounting services like xero. This helps connecting your bank transactions directly to your ledger and saves a lot of your time and manual effort for bookkeeping. Software can also automatically generate expense reports and you and your team can view those reports from anywhere using the internet.
Set reminders for your receivables and payables – You may have installments of loans to pay off every month or receivables to collect from your regular clients every three months. It is possible to lose track of those receivables and payables, but this may mean financial losses for you. If you don’t pay your debts in time, you may need to pay more on taxes. If you forget to collect your receivables in time, your business may suffer cash flow problems. The best way to resolve this problem is by setting reminders for your receivables and payables. You can use software to do the job for you.
Have a system in place for payroll – No matter how small your team is, you should set a proper payroll system to keep track of your labor costs. Remember that labor costs account for a major percentage of a small business’ expenses. Make sure you track all expenses including perks, benefits and overtime. Set a fixed date for paying your employees and withhold the right amount of taxes. You can use payroll software that allows you to track work hours and view and approve leave requests through an employee app. This makes the whole process more organized and time-saving.