Small Business Accounting Best Practices
You may find accounting dead boring and you may have bunked your various accounting sessions in college in order to escape the mental trauma. But, when you setup your small business, accounting will appear again and may haunt you. Whether you call it ‘Revenge of Accounting’ or anything else, the reality is that every entrepreneur and small business owner must at least know about the best practices in accounting to effectively manage the cash flow. Here are four best practices for small business accounting that every small business owner must know.
Draw a Clear Line between Personal and Business Expenses
Many small business owners do not have a clear distinction between personal and business expenses. The result of such action is not a good one. You, as a small business owner, have to realize that your business is a separate legal entity and its profits are not your own. You may withdraw some of the profits but never blur the line between your personal expenses and the expenses of the business or else liquidity crises will soon emerge. The easiest way is to set up separate bank accounts.
Invest Your Money in the Right Accounting Software
Now, you cannot spend your days making accounting entries. That boring job is what an accountant is made for. If you don’t want to hire an account, you can purchase accounting software that will make your life easy and you will be able to manage your accounting department all on your own. One such popular software is QuickBooks developed by Intuit. Click here to read our blog on how small businesses can benefit by using QuickBooks.
Keep a Track of Your Business Spending and Expenses
At the end of the month, you should track how much your business has progressed. Keeping track doesn’t necessarily mean that you are a miser rather it signifies that you are a thrifty entrepreneur. As a small business owner, your aim must be to reduce the amount of spending and increase the revenue stream. This goal can be achieved by critically analyzing your business’s spending and expenses.
Stay Vigilant to Avoid Accounting Shenanigans
Even if you have hired a team of accountants for your small business, you must know how to read accounting statements yourself. Since it’s your money at stake, you have to keep your eyes open and critically audit the financial statements to watch out for any accounting errors.
If you are an owner of a small business and are located in the State of Maryland and want to know more about business accounting, then call us today at 410-242-0526 for business consultation. We, at ‘CFO Source’ also provide tax planning, bookkeeping, and payroll services to our clients. We have been providing consultation services to our clients for more than a decade. Click here to visit our official website or click here to subscribe our YouTube channel.