3 Small Business Accounting Tips
As a small business owner, I understand the challenges and pressures of running a business. And one of the biggest challenges that most of us face is juggling the day-to-day responsibilities while also efficiently managing the financial aspects, such as bookkeeping and taxes. For most of us, small business accounting can be overwhelming, confusing, and stressful - so it's no surprise that it’s difficult to keep up with!
That's where this blog post comes in.
As an accountant, I have the expertise and knowledge to help business owners navigate the world of bookkeeping and taxes. By following the small business accounting tips outlined in this blog post, you can streamline your bookkeeping processes, automate time-consuming tasks, and stay on top of your finances.
Designed to provide you with practical advice and actionable steps you can take to make your bookkeeping quick and easy - I sincerely hope that reading this post helps reduce your stress and frees up time to focus on the aspects of your business that you get excited about!
After reading this post and implementing my expert tips, you will be able to:
Gain more control over your small business finances
Increase your efficiency and;
Ultimately, boost your bottom line
So, let's get started with the first of my 3 accounting tips for small business owners.
1. Software: What’s the best choice for your business?
The first step towards efficient small business bookkeeping is choosing the right software - and which software you choose will depend specifically on your business’ needs.
With that being said, there’s three main software choices for small businesses, so here’s my rundown of them in order of preference.
Quickbooks
Quickbooks is a popular and versatile accounting software that I highly recommend for small businesses. It’s an all-around favorite because it’s scalable, easy to use, and has a variety of great features that help keep your bookkeeping organized.
Hands down, one of the biggest benefits of Quickbooks is its scalability. It can grow with your business and accommodate changes in your financial needs over time. Additionally, Quickbooks is rated as one of the top accounting software options available, which is a testament to its reliability and effectiveness.
Quickbooks also has extensive help resources and forums, making it easy to find answers to your questions and troubleshoot any issues you encounter. This level of support can be invaluable for small business owners who may not have the time or resources to hire a dedicated bookkeeper or accountant.
However, it's important to note that Quickbooks does have some downsides as well. One potential drawback is that adding more users can increase the cost of the software, which can be a concern if you’re on a tight budget. Additionally, you may find the software to be overly complex or difficult to use at first, but with some practice and training, it can become an incredibly useful tool for managing your finances.
Freshbooks
Freshbooks is also a popular accounting software choice for small businesses who prioritize invoicing, payment processing, and scheduling. While it may not have as many features as Quickbooks, it's a great option for small businesses that require less extensive accounting software.
One of the main benefits of Freshbooks is its third-party integrations, which allow for seamless integration with other services such as Etsy or Stripe. This means that businesses can easily import income data from those platforms and keep their accounting records up to date without the hassle of manual data entry.
Additionally, Freshbooks has integrated time tracking for account holders and contractors, which can be useful for businesses that bill hourly for their services. Overall, Freshbooks is a great option for small businesses that need reliable, streamlined accounting software that also includes some automation features.
Wave
Wave is also a good option for service-based small businesses who don’t need to run payroll. It’s largely free to use for small businesses, with an unlimited number of users and businesses able to be run within one account. The downside is that payroll has locational limitations, and if you need integrations, you’ll also need Zapier. Wave also has higher fees for credit card and ACH payments than other invoicing software.
Regardless of the software you choose, make sure you’re not skipping steps in the setup, and ensure your account is 100% set up as soon as you can. Any missing data or integrations can cost you a lot of hours of manual maintenance in the longer run if you leave any loose ends here.
2. Automation: Keep things running smoothly and in the background
Automation can be a game-changer for small business owners when it comes to bookkeeping.
Not only does it save you time in the long run, but it can also reduce errors and help ensure accuracy. Here are some of the most popular forms of small business accounting automation:
Bank Feeds: Automating your bank feeds can save a lot of time and hassle. Once you’ve set up the feed, your transactions will automatically be imported into your accounting software. This means you won’t have to manually enter each transaction, reducing the risk of errors and omissions.
Expense Tracking: Keeping track of receipts and expenses can be time-consuming. Automating expense tracking can help you keep a more accurate record of your expenses without having to manually enter each one. Many accounting software programs offer mobile apps that allow you to take a picture of your receipt and automatically categorize it.
Invoice Reminders: Late payments can be a headache for small business owners. Automating invoice reminders can help ensure you get paid on time. Many accounting software programs allow you to set up automatic reminders that will be sent to your customers when an invoice is due.
Receipt Scanning: Receipt scanning technology has come a long way in recent years. Many accounting software programs now offer receipt scanning features that can automatically import your receipts and categorize your expenses. This can save you time and help ensure accuracy.
In addition to these automations, there are several other best practices to keep in mind.
As mentioned earlier, setting up a separate business bank account and credit card can help keep your business expenses separate from your personal expenses. Keeping everything on the cloud can also be a huge time-saver, allowing you to access your data from anywhere and reducing the risk of data loss.
Finally, automating your invoicing process can save you a lot of time and hassle. Many accounting software programs offer invoicing features that allow you to set up recurring invoices or automatically send invoices to customers when work is completed. This can help ensure that you get paid on time and reduce the time you spend on administrative tasks.
3. Detailed Records
Keeping detailed records is essential for small business owners to maintain good bookkeeping practices. It's important to keep track of all transactions, including expenses, invoices, and receipts, to get a clear understanding of your business finances. This will not only make tax time easier, but it will also help you to identify opportunities to save money and increase your profitability.
Implement Systems
To make record-keeping more manageable, it's a good idea to implement a system for organizing your paperwork. You can use a filing cabinet or cloud-based software to keep track of all of your important documents. Cloud-based accounting software such as QuickBooks makes it easy to scan and upload receipts, so you don't have to worry about keeping physical copies of every single receipt.
Categorize Your Expenses
It's also important to categorize your expenses correctly. This will help you to understand where your money is going and identify areas where you can cut costs. For example, if you're spending a lot of money on office supplies, you may be able to find a more affordable supplier or reduce your usage. Categorizing your expenses correctly also makes it easier to prepare financial statements and reports.
By keeping detailed records, you'll have a better understanding of your business finances and be able to make more informed decisions. Plus, having everything organized will make tax time much less stressful. It can also help you to identify potential tax deductions that you may have missed otherwise.
4. Outsourcing
If you’re just not able to keep up with your bookkeeping or think it’s worth your time to outsource this part of your business, you’re in luck, that’s an option too.
Depending on the size and complexity of your business, a bookkeeper or virtual assistant can be a huge help in ensuring your accounts are kept square each month. If you’re a solopreneur or freelancer, a VA is a huge boon in this category, and if you’re a more complex smaller business, reach out to us about an ongoing long-term relationship, so you can be confident your accounts are in perfect shape.
My Small Business Accounting Services
Whether you’re a small business owner, solopreneur, or freelancer - accurate and clear bookkeeping is key to ensuring your business runs smoothly and is prepared each year for tax season. That’s why making sure you use the right accounting tools, automate processes where possible, store your documents and records on the cloud, and hire an assistant or a bookkeeper if needed, can all have benefits far beyond your peace of mind.
As a trusted financial partner, my goal is to help you achieve financial security and prosperity. Whether you need assistance with bookkeeping, tax preparation, or financial statement preparation, I am here to help.
Don't hesitate to contact me today to schedule a consultation so you can take the first step towards your small businesses financial success!
