If you are a small business owner (SBO), you may find yourself having issues juggling the day to day demands of your business’ operations and devoting enough time to your accounting duties. To help you in this endeavor, in this quick blog post, we will share some simple accounting tips to help you get your finances in order.
Accounting Tips for Small Business Owners
Below you will find some great accounting tips tailored to busy business owners seeking to get a handle on their accounting needs.
One of the hardest tasks for a small business owner (or any business owner for that matter) to tackle is keeping organized. Having a working filing system for company receipts and records and a separate filing system for personal expenses, is crucial to your business’ well-being.
Your best bet is to keep everything truly separated by having a business account and personal accounts. Having separate credit cards and checking accounts will make it far easier to keep track of expenditures and save you from a huge headache come tax season.
The True Cost of Labor
Perhaps the most important (and costly, depending upon the company) business expense is labor. However, labor is not simply the hourly or weekly wage you pay your employees. It also includes benefits, overtime pay, time-off, bonuses, and any incentives you offer.
Make sure you track the true costs of your employees and contractors so that you can get the full picture of what it costs to run your business.
Collect Payments On-Time
Collecting past-due invoices from clients can become a full-time job, especially for new business owners. The urge to be lenient and not come off as too pushy (out of fear you may chase the client away), can be powerful, but at the end of the day, you have to realize that your business and livelihood is on the line.
Your clients should value the services you offer and paying your invoices should not be considered a favor. Letting invoices pile up not only means less money in your bank account (and less money for your business to operate on), but also increases the likelihood of you never being able to collect the money you are due.
In fact, letting owed payments accumulate can lead to bad relationships with a client. Just like you, their main focus is on their business, and odds are, if they are past due in payments, it is simply because they forgot to cut you a check. If you go too long without reminding them, soon enough the money they owe you will build and quickly get out of control. Before you know it, the client will be angry that they have to pay out such a large sum all at once.
Nip it in the bud and be sure clients pay within a reasonable time. Your business will thank you!
Hire a CPA or Accounting Professional
At the end of the day, as a business owner, your main focus should be on the day to day operations of your business and thinking of ways to grow your company – and its revenue. Concentrating on accounting tasks removes your focus from the things that matter most, and in the long run can make your business (and personal life) suffer.
While it may seem as though hiring an accounting professional will be an additional expenditure, the insights a CPA can bring to the table, and the weight they can remove from your shoulders, can often times cover the costs.
As a small business owner, it is important to delegate, and that holds true for your accounting needs as well. So save yourself the time and hassle and consider hiring a professional to handle your business’ accounting needs.