Whether you are planning to launch a start-up in the near future or are already running your small business, learning the right accounting practices is important. Nay, it is vital. Ensuring your finances are transparent and in order at all given times is a mandatory part of being an entrepreneur, and even if you may not be certified in the subject yourself, you certainly have a responsibility to know it to some extent. The nitty-gritties can be tackled by an accounting professional, whom you have to choose with a great deal of care. Your accounts will not only be important for accurately laying out your revenue, profits, losses and expenses, but also for taxes. And if you fail to meet your taxes properly, you run the risk of facing expensive penalties and fines. So avoid these complications, and take a look at the following tips to help improve your accounting system.
Keep Business and Personal Separate
Quite frankly, this is not just good advice for streamlining your accounting processes, but for life too. Never mix business with personal, and make that a rule of thumb to abide by. This includes keeping your expenses separate. If you are utilizing your personal funds to run the business, then allocate this for the purpose. Do not tap into the company’s resources to run your personal needs, especially not if it is a start-up or newly established small business. You will never be able to get out of the loop, and you will regret getting into in the first place. So take our advice, and draw a distinction.
Every Expense Matters
Even if it is 50 cents, note it down. You may assume that such small amounts do not matter, but do not forget that every cent goes towards making a dollar, and every dollar counts in the bigger picture. Plus, you are not in a position to operate with such luxury, especially not with a small business. You need to be quite stringent from the time you launch, and ensure that all bills, receipts and invoices are appropriately filed and recorded. Have digital copies of everything, because not only is it impractical to store physical copies over time, they also may fade. If it is too much to handle right now, hire a third party like DCH Bookkeeping to help you out.
It is completely understandable that a business cannot really spend every single day totaling their books and calculating figures, especially not when there is so much else going on. But, you should make it a point to allocate a certain time every week to tend to this. Make sure your books are all up-to-date by Friday, so when Monday rolls around everything is in order and you work with a clean slate. If there are pending payments (which there will be), they need to be sorted out as well. What is important is that every dollar must be accounted for, else how do you know what you spent on and what came in?
Meet With Professionals
As mentioned above, you may not have the resources to handle this on your own within the company. Most start-ups tend to consist of no more than 2-3 people, and the likelihood of them being able to maintain these records so accurately is slim. If they can, then great, but otherwise your option is to source a third party who are experts in this sort of thing. Though it may cost you more than you expected, it is essential, so consider it as an investment in your business as well.