What makes a small business or a startup successful is adequately managing the finances. With small business owners being so overwhelmed with so many tasks and other activities on a daily basis, the last thing they need is to do their own accounting. So, if you’re wondering what you can do to set your small business up for success, here are some simple accounting tips to help you achieve that goal.
1. Keep your business and personal finances separate
As a small business owner, one of the first things you should do is open a business bank account. Instead of your income and other finances being thrown into your personal account, you should keep those two accounts separate.
The last thing you would want to happen is to search through your personal transactions to find that one business transaction, which is not only time-consuming but also expensive and can result in making mistakes. By opening a new bank account for all your business transactions, you’ll make things more organized, as your business finances will stay in your business account and personal ones in their own account.
2. Hire an accountant or a bookkeeper
Another thing you should do as early as possible is get a professional to manage all the accounting business for you. You don’t want to waste your valuable energy and time on keeping financial accounts when you have so many other responsibilities on your plate.
By hiring a professional, you’ll help your business in different ways such as reducing serious accounting errors, strategic planning, keeping your records up-to-date and in place, and familiarizing yourself with the areas for growth, potential costs, or extra tax deductions, just to name a few. That’s why it’s essential you opt for the best and hire Verus accountants to help you build your business and solve financial issues.
3. Get bookkeeping software
Today, an ideal tool for any small business is reliable bookkeeping software. As opposed to earlier times when you had to spend hours going through piles of paperwork and carrying out manual operations, with cloud-based software, you can make these actions automatic, and thus make your life much easier.
By picking any of the various software options, you’ll do your small business a favor in many ways. For example, your invoices will be automatically sent, all the expenses will be continuously tracked, and your reports produced without any manual labor.
4. Pay yourself a salary
One of the most frequently overlooked accounting tips for small businesses is paying yourself a reasonable salary, and managing the process through the system like any other employee.
By paying yourself a salary, you reinforce the very important idea of keeping your business and personal accounts completely separate. Not only does it make it easier to stay within budget, but also makes it less nerve-racking to keep track. Rather than having many transactions on a monthly basis, in which the business pays the costs on your behalf, consider having the business write you a check once a month that you can deposit into a personal account.
5. Create financial projections for future years
No matter if your business is financially stable or not, you would still need to ensure that everything stays in a positive state. Financial projections aid businesses in determining future income and costs to predict if they are in need of financing or should make a capital payment. A company can use these financial forecasts to determine cash flow and estimate the time to change production plans or pricing.
Hopefully, by following these accounting tips for small businesses and startups, you’ll make sure that your company is successful and financially stable, not only now but for many years to follow.
Salman Zafar is a serial entrepreneur, digital marketer, writer and publisher. He is the Founder of Techie Loops