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When starting a small business, you might know that you need to keep track of your finances, but it can somehow be the one thing that slips your mind.
You may have all your documents and receipts on hand, but no way to organize and manage them. Not having an accounting organization may not seem like a big deal, but it can make or break your small business come tax season.
1. Establish Separation
Establish separation between your work and personal accounts from the beginning. Only make business purchases from your work account, and leave all other purchases to your personal accounts.
Ignoring this simple step makes things harder once tax season rolls around. Not only does it become more difficult to track how much your small business has made; It also makes it harder to track what your business owes in taxes.
The further your business grows, the more you are bound to owe in taxes. Make it easy on yourself from the beginning and open a business bank account.
2. Track Everything
While opening a business bank account makes this step simpler, physically tracking all of your business expenses is another habit to start from the beginning.
Whether it’s done digitally or on paper, you need to keep track of all the money entering and leaving your business bank account. This is also a crucial component of tracking your small business’s financial status.
If you’re not sure about what you should keep on hand, this list might help.
3. Develop a Bookkeeping System
You can develop and use whatever system you feel is best for your small business, but having a digital software that does it for you is often ideal.
It allows some peace of mind since human errors are less likely to occur, and you won’t have multiple documents and receipts floating around your office all the time. Some bookkeeping software even files and pays your taxes for you.
Sign up for a website like Quickbooks and sync it with SWELLEnterprise’s accounting module.
The accounting module in our all-in-one business software constantly syncs with Quickbooks or Xero to keep your financial information constantly up-to-date. It allows you to see an easy-to-read overview of your expenses and spending habits, and even more.
4. Consult a Professional
Banks sometimes offer free professional account help or advice, which could be enough to get your business off the ground when it comes to accounting information.
No matter what you choose, consulting a professional may help your business in the long run.
Utilize every second of your free appointment by preparing in advance. Come with all of your tax documents, bank statements, and other financial information prepared, and have a list of questions ready.
Here are some examples:
- What can I do to help you do a better job for me?
- How can you help with healthcare for my employees?
- How can I better manage my cash flow?
- How many clients do you work with at a time? How big are those accounts?
- How do you keep clients up-to-date on their financial information?
- Are there any industry-specific tax requirements I should know about?
These are just a few things to consider, and it’s also important to read third-party reviews when available. Making a list of what you’d like in an accountant can help narrow possibilities when searching for one.
5. Establish Tax Requirements
Tax requirements are going to vary by industry, the area you work in, and what kind of business you own.
Tax requirements for a sole proprietorship vary from an LLC. There are even different ways that an LLC needs to file depending on its size.
Conducting your own research and consulting a professional are the two best ways to get solid answers to any questions you may have.
6. Create a Schedule
If you have an accountant, create a meeting schedule with them. If you don’t, create a schedule that allows you to keep track of your finances without allowing it all to get out of control.
Creating a schedule doesn’t only have to mean taking stock of your greater financial picture. It can also mean setting aside one day every other week or once a month to check up on and take stock of ordinary housekeeping tasks.
Here are a few examples:
- Check on unpaid customer invoices
- Deposit all cash and check payments at the bank
- Categorize expenses
- Send documents to your accountant if needed
- Accounts receivable and payable reports
- Prepare your estimated taxes
Ultimately, this list is going to change depending on your business type, your number of employees, or even your service or product type.
If you own an LLC, your business may or may not even have employees. If your business is an S-Corp, you’re going to have more financial responsibility than a sole proprietorship or LLC might, simply because you’re likely to have more employees.
7. Reevaluate Periodically
Having a constant picture of your business’s financial state is crucial to your overall success. You can create the seemingly perfect accounting organization system, but that doesn’t mean changes are never going to be needed.
Keep track of and make changes when they’re needed, and be honest with yourself when it comes to cutbacks and reevaluations.
Follow These Accounting Organization Steps for an Ideal Business
No business is guaranteed to have a perfect financial picture at all times, but following these 7 tips for accounting organization is going to make your life easier in the long run.
It’s no secret that starting and maintaining a small business is a lot of work, but keeping track of your finances doesn’t have to be. Let us do all the heavy lifting for you so you can get back to running your business the way it deserves to be.
If you have any questions or are curious about all things small business, check out our blog, or contact us today.
[…] Successful accounting organization always includes accurately recording income. […]