These small business accounting tips will help you update your books and keep them that way in less time. They will help you maintain financial control and help you manage your working capital more effectively and safely.
- Before you consider recording any transactions in your accounting books, organize your paperwork in your files according to these accounting basics. It will save you time, and time is money.
- Calculate how much you earn in your business per hour. If the answer is more than it will cost to hire a professional bookkeeper, hire one. Otherwise, process the transaction yourself. Hire a tax accountant to do your year-end statement so you don’t have to keep up with arbitrary government rule making and miss out on tax breaks.
- When you have your paperwork in order, consider how you will record your transactions. This could be in a traditional handwritten ledger, or more likely using software. Understand your accounting software requirements before you buy anything to avoid dissatisfaction.
- If you don’t have a lot of money to invest in financial software, then consider using open source accounting software. This can be obtained for little or no cost. Click the link above to learn the pros and cons of using open source.
- Once you’ve decided what you’re going to record your transactions in, follow these basic accounting tips to ensure you record your transactions in the most efficient way possible.
- Make sure all cash is accounted for by performing a bank reconciliation. Make sure the transactions recorded on your bank statements are recorded on your books and that the balance on your statement matches the balance on your books. Make sure you know the amount of uncleared and unpresented checks (checks) that will account for any actual difference between the statement and the account in your ledger.
- Similarly, make sure all petty cash is accounted for by counting the cash in your box and recording it in your cash book.
- Do routine counts on the items you have in stock and make sure what is recorded in your books matches the amount you have on the shelf. This is an area where tight control pays dividends as unexplained differences often occur due to sales “samples”, spoilage, quality defects, returns, etc. This is an important area to get right, as any differences will need to be reflected in the financial statements and will usually directly affect the profit line.
- Keep a record of Fixed Assets. While not a general ledger on your books as such, a fixed asset register is essential for keeping track of essential business equipment. This means cost, location of depreciation, purchase date, and remaining life. The value of these assets are carried on your balance sheet. It can be surprising how, as you get older, things you thought had gone! Especially small high-value technology.
- Follow these small business accounting tips, but don’t forget to use the information on your books wisely. Working capital management is how you manage your daily, weekly, and monthly cash, debtors, vendor payments, and inventory/stock control to stay in business and really make a difference to the bottom line. profit line) of your business.
