Accounting Tips for New and Small Businesses

By REDC Accountant Karla Dillon

Managing the finances of your new businesses is a critical cornerstone to ensuring your business is built to last. We have compiled our top advice for best practices when it comes to accounting for your new and small business.

• Keep your business and personal finances separate.
  

  • Open a new bank account, just for business revenue and expenses.

  • If you need funds for personal expenses, transfer funds to your personal account.

• Choose an accounting software that fits your budget and needs and use it.
  

  • Accounting software can track invoices, pay bills and reconcile accounts. This is a huge time saver!

  • Online platforms (such as QuickBooks Online) allow you to access your info from anywhere.

  • Price varies widely and there are even some free options available.

• Balance the books monthly.
  

  • It is easy to put off paperwork until “later” but staying on top of your accounting records saves a lot of time and frustration at the end of the quarter/year.

  • Having your records up to date allows you to get a clear picture of your business’s financial status at any point in time.

• Keep your business accounting documents.
  

  • Organization is important, and allows you to easily track any questions that may come up.

  • Documents serve as proof if you are ever audited by the IRS or another entity.

  • The general recommendation is a minimum of 5 years, and frequently 7 years.

  • Documents you should retain include invoices, receipts, and payroll records.

  • Utilize an organized filing system, either via paper or electronically.

• Utilize financial reports.
  

  • Most accounting software platforms can prepare essential reports such as balance sheet, profit and loss (income) statement and statement of cash flows.

  • Financial reports help you keep track of your company’s financial health and can help you make decisions on growth.

• Keep track of cash payments.
  

  • If your business receives cash payments, they should be deposited into your business bank account, prior to spending.

  • Depositing the funds and recording them into your accounting software will prevent you from forgetting which customer paid or what they purchased.

• Keep up with invoicing.
  

  • Send invoices to customers as soon as the job is complete, or at the very latest, the end of that month.

  • Delays in invoicing can appear as being unorganized to your customer.

  • Immediate invoicing via your accounting software allows you to track accounts receivable and stay on top of payments due to you.

• Pay your employees on time.
  

  • Employees rely on timely payments so they can pay their bills.

  • Be sure to set aside funds for payroll taxes.

  • Be sure to pay payroll taxes on time as well.

• Ask for help.
  

  • If keeping track of all your financial transactions proves to be too much, consider hiring an experienced bookkeeper. You can outsource as much or as little as you want done.

  • Common bookkeeping tasks include:
    

    • Entering transactions into the general ledger

    • Completing bank and other account reconciliations

    • Preparing/sending invoices

    • Preparing monthly financial reports

    • Entering/processing payroll

    • Paying bills

  • A good bookkeeper can also offer advice on appropriate software, help you prepare an annual budget, and understand your financial reports