With all the pressures and responsibilities that come with running a business, most small business owners find it extremely difficult keeping up with issues to do with finances and accounting including invoices, taxes, and accounts to name a few. Sure, accounting is never the easiest of tasks, but that shouldn’t intimidate you. Furthermore, thanks to accounting services providers such as Wizz Accounting, outsourcing these responsibilities to a team of financial experts can work magic for your business and save you a lot of time and energy.
In this post, we outline six effective tips to help simplify accounting for your business.
Keep all your financial records organized
This might sound like a no-brainer but keeping your bank statements, invoices, and receipts is one of the most vital decisions you can take to enhance your accounting process. Also, you can automate things, for instance, invoicing software can help you spend less time on paperwork and integrate everything from invoicing, billing, expenses, and timesheets boosting your overall efficiency. It is not uncommon to write down an expense or add it to your invoicing software only to forget where that figure came from several months down the line. In this case, having a tangible document will quickly sort that problem out. A valuable tip here is to always keep your financial documents organized, preferably by date for easy tracking.
Use automated tools for more accurate accounting
In a technology-driven world where nearly every process can now be automated, using an invoicing software is highly recommended if you’re to streamline your business finances. Luckily for you, there are lots of these tools today – both free and paid – and it’s completely up to you to decide which one best suits your needs. However, a word of advice here is that you need to be extra keen on choosing this software, taking into consideration key factors like features, pricing, and compatible integrations. The idea is to minimize the need to move from one tool to the other as transferring financial data can be quite a costly affair.
If you’re looking for a proven invoicing software that ticks most boxes for small business owners like you, this Xero vs. Quickbooks Online comparison guide should be a good place to start your search. Discover the strengths and weaknesses of these two tools and make your decision based on the same. Either way, both are great software that will quickly transform how you handle your business finances.
Avoid mixing business with personal
A common financial mistake we see a lot of small business owners make is failing to separate their personal and business finances. Learn to track and keep all business-related expenses separate and routinely reconcile them to ensure all the records match up at all times. For increased accuracy, consider opening different bank accounts for your personal and business finances to minimize accounting mistakes and mix-ups.
Learn about your tax obligations and strive to meet them
Let’s face it, not many business owners find it exciting and fun to learn about and implement taxation in their businesses. But with the huge implications that this topic can have on your business, it pays to have the correct information on it even before setting up your business.
Consider this example – the amount of taxes you pay mainly depends on the business structure you choose. You’ve probably heard that an LLC is an excellent business model when looking to save on tax, but again remember not all businesses will seamlessly fit here.
As a general rule of thumb, consult widely, whether with an attorney or a tax expert, for solid advice on taxes as part of the process of setting up a business. You can even gain access to an online tax expert from your home in San Jose or any other city in the United States. Further, learn how to file your tax returns or hire an experienced accountant to help you with the work once your business begins making money.
Create templates for your most repetitive tasks
Like most regular tasks, accounting work rotates around doing the same type of work – collecting income, creating receipts, compiling tax information, etc. To save on time and enhance accuracy, how about you create templates and written procedures for each repetitive process you follow?
Review your accounting records regularly
This tip is meant primarily for non-accounting professionals who probably dread everything accounting and would rather take care of other business processes than create time for this crucial task. To stay on top of your business accounting, it’s recommended that you establish a routine that helps to ensure you complete the required tasks before they can pile up. Set aside some time, usually at the end of the day or week, and learn how the business is doing financially. This way, it becomes easier to make more informed financial decisions and at the same time enabling you to stay prepared for tax time.
One of the costliest mistakes you can commit as a business owner is failing to take charge of your accounting and finances at large. Follow the six simple tips we’ve shared above to increase your chances of growing your business and finding more business success.