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Running your own business is no small feat, even if you classify yourself as a relatively small start-up. Running a business takes time, it takes effort, it costs money, and it takes a whole heap of commitment in the process. No matter which services and/or products you provide, you will always have competition in some form or another, which is why you simply cannot afford to cut corners, no matter what. Take bookkeeping and accounting for example.
If you thought accounting was simply a matter of keeping invoices, receipts, and proof of earnings in an old drawer or filing cabinet, you are very sadly mistaken. A lot of small businesses tend to overlook the importance of keeping their financial affairs in order, and consequently, they end up paying the price further down the line. The good news is that thanks to accounting software, as well as accounting experts, a solution for your accounting woes is never far away.
7 must-know accounting tips for your business
To help you get a handle on your accounts, we’ve compiled this list of the 7 top accounting tips for small businesses, ranging from everything from accounting software to simply opting to go paperless. So, let’s take a look and see what you can do to help keep your accounts in order.
Separate your finances
One of the most common mistakes that professional accountants come across on a regular basis, is when business owners fail to keep their personal and professional finances separate. These business owners basically use the same bank account for personal use, and business use, and needless to say, things quickly get very confusing. When you use just the one account, this makes it so, so much harder to separate business expenses from personal expenses. Potentially this means that you could miss out on claiming back expenses which were tax deductible.
Not only that, but when you take money from the same account as your business, you are basically taking money from your business, and who knows when you might need it again? To make life easier, make sure you have at least two bank accounts – one for personal use, and one for your business.
Switch to paperless
By going paperless, not only are you helping the environment, you are also helping your business, and subsequently, yourself in the process. You see, many small businesses often print out receipts and invoices and mail them to clients, which is not cheap. Not only are you paying for paper, stamps, printer ink, and postage, but you are also wasting time in the process.
When you embrace modern technology by going paperless, you will quickly find that it is not scary, and in actual fact, it is much easier for you and your company as a whole. There are plenty of e-invoicing software available for small businesses that reduce manual financial tasks and automate financial operations.
And not just that but by keeping records online, you can easily refer back to a certain date and time if you are unsure about something. Keeping records on paper is risky because paper gets lost more easily, plus it could end up in the trash by accident. With online bookkeeping, however, this isn’t a concern, providing, of course, that you perform regular backups.
Embrace modern technology
Expanding on what we’ve just spoken about in regard to modern technology, if you embrace it, rather than fear it, your business as a whole will benefit hugely. You see, by using technology, such as accounting software, you have specialist software which is designed primarily to help businesses keep their books and accounts in order.
Then of course, there is cloud technology that ensures that you can back up your data, keep it safe, and access it from virtually anywhere, on any device. You can also actually save money on backups and servers, which is certainly not something to be sniffed at.
By using accounting software, and modern technology in general, keeping your accounts and finances in order is easier than ever, plus it helps reduce the risks of human error. With modern payment solutions offering features like automatic reconciliation with 2-way sync capability with accounting software, you can save hours on manual data entry.
Whilst there are many different types of modern payment solutions to choose from, you will find that generally, most of them will allow you to automate any recurring transactions and payments, whilst importing invoices and bank statements.
Utilize cash flow forecasting and budgets
To keep your business finances in good shape, it’s important to be flexible and adjust your plans when necessary. That means regularly checking how your actual financial performance compares to what you expected and making changes based on what’s really happening in the market. For instance, if you’re spending more money than you planned in one area or making less money than expected, it’s crucial to figure out why and adjust your cash flow budget accordingly.
It’s also a good idea to think ahead and consider what might affect your finances in the future. Using cash flow forecasting tools can help you stay prepared for whatever comes your way. Plus, Forwardly offers a free cash flow forecasting tool to assist you in managing your finances effectively.
Streamline your accounts receivable
This is one of the most important accounting tips ever! Managing accounts receivable is vital for small businesses to keep cash flowing smoothly. Late payments can cause financial headaches, so it’s important to stay on top of them. One way to do this is by tracking overdue invoices and gently reminding customers to pay up. You could also offer incentives for early payments or set up automatic payments.
Consider using instant payments, this option speeds up the payment process and makes it easier for customers to pay promptly. Staying proactive and making it simple for vendors to pay can help keep your cash flow healthy and your business running smoothly.
Take the time to find a good accountant
Another very, very common mistake that small business owners make on regular basis, is trying to handle the accounts themselves. They worry that bringing in an accountant may wreck their systems, or make life harder than it needs to be, when in reality if you choose the right accountant, the exact opposite will be true.
Professional accounting companies and bookkeepers work with small businesses like yours for a living, and many of them know exactly what they are doing. Whilst these accounting services don’t come for free, they are certainly well worth investing in, and as the saying goes ‘you have to spend money to make money’.
Some accounting firms offer additional services like cash flow consulting, so look for one that meets your needs. Don’t hesitate to talk to multiple companies before making a decision.
Don’t overcomplicate things
One reason why accounting software in small businesses is so popular is that it helps simplify business accounts. The simpler things are the more efficient the business becomes, and the more time you will save.
When keeping records of your books and your accounts, don’t try to get too technical, otherwise, you run the risk of overcomplicating things. Whether you use spreadsheets, databases, or anything else, make sure things are simple, concise, and easy to understand.
For example, you may wish to have column or book dedicated solely to your earnings, another one for your expenses, another one for debts, and so on. Everything should be clear, simple, and straight-to-the-point.
By doing this, you know exactly what you’re making, exactly what you’re spending, how much you need, what’s coming in, what’s going out, and more. Nothing will be left to chance, and if done correctly, there shouldn’t be any uncertainty in regard to your business accounts and finances.
We can help
Forwardly is here to help small business owners. With affordable instant payments and free same-day ACH services, Forwardly simplifies the management of accounts receivable and payable, promoting consistent cash flow. By following these accounting tips and using Forwardly, your business can handle financial challenges more easily.
With Forwardly’s faster payment methods, small business owners can focus on growing their businesses without worrying about complicated financial tasks. Plus, there’s no commitment required, as Forwardly doesn’t charge monthly fees or subscriptions. You can try sending bill payments for free here.
