Getting Your Business Accounting In Order
A lot of people get into a business because they have a passion for something. They don’t always realize that good ideas and passion aren’t enough to make your business successful. Without good business accounting practices, you could end up in trouble. Until you can hire a professional accountant, here are some basic steps to ensure you don’t run into problems later.
- Establish dedicated accounts for your business
Especially when you first start out, it may seem easier to use your personal credit cards and bank accounts for your business. However, this can make it harder to calculate deductible expenses later. Get a dedicated bank account and credit card for your business as early as you can manage.
- Use business accounting software to save time
There are so many great, affordable accounting software options on the market, there’s really no reason to struggle with home-made spreadsheets. It will save you time and hassle, and it can cut down on accounting mistakes that can lead to big fines with the IRS later.
- Follow up on invoices and receivables consistently
If you haven’t already, make sure you have a written policy regarding payments and that your clients are aware of it. Then make sure you follow up with clients to ensure you’re getting paid. If you expect to be paid within 30 days and a client doesn’t comply, have a procedure in place to deal with it. You can start by mailing a copy of the invoice and a gentle reminder.
- Keep track of your inventory
It might seem excessive to track every item in your inventory, but it’s an important part of business accounting and it will prevent you losing money through loss and theft. The better organized you can be about tracking the purchase and sale of your inventory, the better.
- Dedicate time to update your books
Don’t leave bookkeeping for ‘when you have time.’ This can lead to a downward spiral of putting it off because it requires too much time to deal with, which only makes the problem worse. Instead, set aside a little time each week to bring your records up to date. It will save you time and hassle in the long run.
If you can follow these basic tips, you should be able to avoid unnecessary money loss through sloppy business accounting. But once your business has grown beyond a certain point, go ahead and hire a professional. They’ll have expertise and insights that can save you money, and allow you to focus on the parts of your business you’re best at.