Accurately Record Income
Loans, revenue from sales and other cash infusions are easy to lose track of, but you need to keep tabs on all your incoming cash flow.
If you don’t, you could end up underpaying your taxes, and that can lead to avoidable IRS penalties.
As with expenses, your accounting method will determine exactly when to record income.
Automate Accounting Practices with Accounting Software
Accounting software is a great tool for virtually any small business.
You can use it on your own or give secure access to your bookkeeper or accountant, should you decide to hire one.
QuickBooks is the best known accounting software, though there are several smaller competitors now as well.
You should be able to link your bank account or credit car.
Consider Hiring A Professional, Even If Temporarily
Hiring a professional bookkeeper or accountant, even for just a few hours per week or month, can make a big difference.
The work of a bookkeeper and accountant overlap, though a bookkeeper is mainly concerned with recording and classifying income and expenditures.
An accountant might also file taxes and help you with strategic planning.
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Dedicate Time to Update Your Books
Block out weekly time in your calendar to get necessary paperwork in order and avoid letting receipts and invoiced receivables pile up.
Make sure to stick to the time you’ve set aside.
This can save you a lot of catch up work as tax season nears.
Accounting software, such as QuickBooks, can save you time here by automatically categorizing income an.
Expect Major Expenses
Computer upgrades, equipment replacement, and tax deadlines shouldn’t come as a surprise.
Larger capital expenses often come up during slower months so plan ahead to avoid a cash crunch.
The good news is that an IRS provision called Section 179 lets you deduct up to $1 million of business property and equipment in the year of purchase, instead of d.
How can accounting help small business owners juggle multiple priorities?
Track deadlines:
Accounting is a deadline-driven function which may be especially challenging for small business owners who juggle multiple priorities.
Plot out and organize short-term, mid-term and longer-term deadlines, since missing them can prompt penalties, fines and operational complications. Keep Tabs on Labor Costs
Paying employees, including yourself, might account for as much as 70% of a business’s total budget.Take note of overtime, perks, and other benefits you offer to prevent over- or under-paying.
Your accountant or accounting software should also be able to help you calculate and pay your payroll taxes, which have different rules and deadlines than in.
Maintain Inventory Records
Theft costs U.S. businesses $50 billion each year and can throw off your books.Avoid misplacing merchandise or theft by noting dates purchased, stock numbers, purchase prices, dates sold and sale prices.
The more organized, the better.
You can buy stand-alone inventory management software to help you with this task, or many accounting softwares int.
Track Every Expense
Label and categorize each expense, and track your cash flow to ensure that you can maximize tax write-offs and credits.
Dollars add up quickly and you can easily run out of money.
Use your business credit cards for all purchases and you won’t end up with a wallet full of paper receipts to sort through.
This also means you can earn rewards and cash .
What are the basics of small business accounting?
Nor does it have to take you away from the personal reasons you started your company in the first place.
Instead, the basics of small business accounting come down to a handful of best practices and only three essential reports:
your balance sheet income statement and cash flow statement. Why do small businesses need good accounting practices?
On the flip side, solid know-how and good accounting practices improve the quality of financial data, which leads to better-informed business decisions.
But small businesses may struggle to keep up, especially when the accounting function, like many other responsibilities, falls to the small business owner.
