Owning a small business is often a little complicated. As the owner, you are probably forced to wear many hats. Not only do you do inventory and payroll, you're probably also responsible for scheduling and customer service. It's a lot, and it can take up a lot of time. Luckily, you can make your small business accounting easier by following these four tips:
1. Keep Funds Separate
Perhaps one of the most important tips is to keep your funds separate. This includes personal funds, business funds, and borrowed funds. Lumping them all together might seem easier, but you'll soon find that it is quite time consuming to separate them when it comes to tax time. If you do accounting by hand, make sure you have three separate notebooks for each. If you use your computer, use software that automatically separates the funds. This will make it much easier to determine how much money you have personally and in your business. It will also make it easier to determine how much debt you're in.
2. Detail Expenses
Another helpful tip is to detail your expenses. Be very thorough and detail every single item you can. This will help you budget, as you'll know what type of expenses to expect in the coming days and weeks. Although a simple tip, it's one that is hugely valuable. So keep records and track everything meticulously. Your finance books will thank you.
3. Determine Minimum Profits
You should also take some time to determine how much money your business needs to bring in each month. This will help you know exactly how much you need to make to ensure your business keeps running. Be sure to include expenses for items and services you'll need. In addition, include how much you'll need to pay yourself and your employees. Do this regularly, so that you can adjust as needed.
4. Hire Outside Help
Finally, consider hiring outside help. If your business is expanding and you just can't do the accounting anymore, hire outside help. You can hire a professional to do your finance books daily, weekly, or monthly – it all depends on how much help you need. Even if you don't need help in all areas of your accounting, a professional can help with payroll or invoices. It's all up to you, your budget, and your needs.
As you can see, small business accounting doesn't need to be so complicated. With a little bit of time and attention to detail, you'll be well on your way to keeping your finances healthy and organized.