Top 10 Small Business Accounting Tips

These small business accounting tips will help you update your books and keep them that way in less time. They will help you stay in financial control and help you manage your working capital more effectively and safely.

1. Before considering recording any transactions in your ledgers, organize your paperwork in your files according to these basic accounting concepts. It will save you time and time is money.
2. Calculate how much your business earns per hour. If the answer is more than it will cost to hire a professional accountant, hire one. Otherwise, process the transaction yourself. Get a tax accountant to do your year-end filing so you don’t have to keep up with arbitrary government rulemaking and miss out on tax breaks.
3. When you have your paperwork in order, consider how you are going to record your transactions. This could be in a traditional handwritten ledger, or more likely using software. Understand your accounting software requirements before purchasing anything to avoid dissatisfaction.
4. If you don’t have a lot of money to invest in financial software, consider using open source accounting software. Click the link above to learn about the advantages and disadvantages of using open source.
5. Once you’ve decided on what to record your transactions in, follow these basic accounting tips to ensure that you record your transactions as efficiently as possible.
6. Be sure to account for all cash by performing a bank reconciliation. Make sure that the transactions that are recorded on your bank statements are recorded in your books and that the balance on your account statement is in accordance with that of your books. Make sure you know the amount of the uncleared and unrepresented checks (checks), which will account for any actual differences between the statement and the account on your ledger.
7. Likewise, make sure all petty cash is accounted for by counting the cash in your cash drawer and agreeing it with your cash book.
8. Do routine counts of the items you have in stock and make sure what is on file in your books matches the quantity on the shelf. This is an area where tight control pays dividends, as unexplained differences often occur due to sales ‘samples’, spoilage, quality defects, returns, etc. This is an important area to get right, as any difference will need to be reflected in the financial statements and will generally directly affect the bottom line.
9. Keep a record of fixed assets. While it is not a ledger on your books as such, a fixed asset register is essential for keeping track of essential business equipment. This means the cost, the location of depreciation, the date of purchase, and the remaining life. The value of these assets is recorded on your balance sheet. It may be surprising how, as you get older, the things you thought you had are gone! Especially small high-value technology.
10. Follow these small business accounting tips, but don’t forget to use the information on your books wisely. Working capital management is the way you manage your daily, weekly, and monthly cash, debtors, vendor payments, and inventory / stock control to keep you in business and really make a difference in the bottom line ( the profit line) of your business.