As an inexperienced business owner, one of the most overwhelming aspects of starting a business is keeping track of all the finances. It’s your responsibility to track all your income and expenses, not only to make smart financial decisions in the future and forecast your future revenue but also to adequately prepare for taxes and honor all your responsibilities.
Even with limited operating capacity and a relatively simple business structure, accounting tasks can quickly become overwhelming. With the right strategies, you can take greater control of your accounting and improve your business’s financial outcomes.
Accounting Tips for New Business Owners
These are some of the most important accounting tips for new business owners to follow:
1. Keep Your Business and Personal Expenses Separate
Seasoned business owners already know this, but for new business owners and small business owners, the reality of this isn’t as clear. It’s vital that you keep your business and personal expenses separate, even with ambiguous expenses that seem like they straddle the line. Don’t pay for business expenses out of your personal account, and don’t use your business account for personal items. Draw a firm line in your mind and do not cross it.
2. Track Everything
There’s no such thing as a small, unimportant expense in the world of business finance. At least, that should be your overall philosophy. Track every financial transaction relevant to your business, including every expense you pay and every cent of income you generate. Be meticulous, accurate, and detail-oriented, even for things that don’t seem like they’re that important; you’ll thank yourself later.
3. Rely on Intuitive Software Solutions
Online bookkeeping solutions and other types of accounting software can make your life a lot easier. As long as they’re intuitive and relatively easy to learn, you should be able to utilize a wide range of tools and features to track your finances more efficiently and painlessly. If the platform is cloud-hosted, you can also rest assured that your data is backed up and you won’t lose any of your financial records.
4. Make Time to Update Your Records
You have to make time to update your accounting and bookkeeping. If you’re the one doing these tasks, set aside at least 15 minutes a day to review all your financial transactions and log them appropriately.
5. Automate Whatever You Can
Many of the tools you use will have built-in automation features to assist you in your accounting needs; make sure you take full advantage of them. Automation spares your manual effort, so you save time, but just as importantly, it happens automatically – so you can reliably issue invoices, even if you’re naturally forgetful.
6. Keep An Eye On Your Biggest Expenses
While keeping track of your finances, pay attention to your biggest expenses, such as your labor, your raw materials, and your major purchases. If you want to remain profitable, you have to avoid overspending in your biggest categories. An attentive eye will help you analyze your patterns so you can improve them in the future.
7. Watch Your Inventory
Accounting isn’t just about finances; it’s also about inventory. Make sure you’re tracking the inventory relevant to your business, so you can ensure you always have a steady supply to give your customers, you avoid ordering too much, and you stay on top of your loss prevention strategy.
8. Keep Tabs On Invoices And Receivables
Time your invoice payments intelligently and issue invoices consistently. You may also need to follow up on your invoices in the event of late payments to maximize your cash flow.
9. Plan For Taxes
One of the most important financial strategies for business owners is tax planning. Tax responsibilities are nothing to take lightly; if you don’t pay your taxes on time you could face a serious penalty, and if you don’t account for your taxes intelligently, you could end up seriously overpaying. Devote time to understanding and planning for taxes as early as possible.
9. Hire A Professional
Finally, don’t hesitate to hire a professional. Accounting and bookkeeping are complex tasks that are vital, yet time-consuming. Hiring some help could be exactly what you need to polish your approach and relieve you of the burden.
The Path to Better Accounting
A better accounting structure isn’t going to spontaneously appear in your business; instead, it’s something you have to develop over time. Pay close attention to the tools and tactics that work well for improving your accounting efficiency and accuracy and don’t be afraid to change things up if they aren’t working.
The sooner you get your accounting under control, the sooner you can focus on the more interesting and exciting aspects of your business operations and growth.
