With growing your business there is no shortage of tasks to complete. There is always a long list of projects to finish. No matter how fast you knock off projects on your to-do list you continue to get more and more work. When you are busy thinking about profits and figuring out ways how to get more customers, accounting is one of the last topics on your mind. However, it is still one of the most important things to think about in order to keep your business well organized.
Here are three small business accounting tips to keep your money organized.
Use a cloud bookkeeping system.
Bookkeeping is one of the most important business tools for your small business. It is the process of recording all transactions in regards to income versus expenses. In addition, it is keeping track of your accounts payables and receivables to make sure that money is coming in that is due and that you are paying your bills.
When deciding what type of bookkeeping system to choose from you can choose between ‘accrual’ or ‘cash’ methods. A ‘cash’ method of recording refers to noting expenses and profits when they are paid while as the ‘accrual’ method notes recordings when the transaction is made regardless of whether the actual cash is transferred or not.
Using a cloud bookkeeping system such as Xero has strong benefits due to the fact that all your data can be accessed on various devices. You can input data from everywhere and it is impossible to lose the information. Even if someone does steal your laptop or your desktop is lost all of your information will still be backed up on the cloud.
Remember to track your expenses.
Although this comes relatively in line with bookkeeping we want to make a point to actually track your expenses.
Some people get so excited about profits and the money that is coming in; they do not take the time to look at the money that is going out.
Also when it comes to taxes you can save a substantial amount of money when recording business expenses. If you are using your home as an office or taking customers out to dinner on a regular basis make sure to record these type of items as business expenses. These figures can help offset your taxable income.
Some additional items you can claim as business expenses include:
- Your phone bill
- Travel and business related meals
- Software subscriptions you use for your business
Make sure to take the time to research all the items you can claim as business expenses to help with your tax deductions.
Of course, you should always consult with a tax professional about your taxes.
Have a business bank account.
Although it may seem easier to keep using your personal bank account as a means of operating your business, in the long run, a business bank account is essential.
As your company expands it will be much easier to track your business-related expenses if you have a separate account. In addition, if you eventually want to take out a loan for your business having a specific business bank account will make it much easier for you to show your business finances, gains, and profits.
Also having a business account sometimes is much more cost effective than having a personal account. Some business accounts come with no fees and a better interest rate than personal accounts.
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