The New Year is here! It’s a time when many of us make resolutions to improve our health, finances or family situations. As a business owner, New Year’s resolutions are also a great way to make positive changes for the future – especially when it comes to finances and accounting. If you’ve struggled with the daily challenges of running a small business, here are some essential accounting tips that will get you back on track and on the road to success.
Think ahead. Are there some expenses you’ll need to incur in the coming year such as new office equipment, computer upgrade or remodeling/repairs? Plan ahead by setting aside money now so you’ll have the resources when you need it. You can also take the stress out of next year’s taxes by putting back a certain amount of cash each month.
Invest in accounting software. A little investment in accounting software upfront will make all the difference in the long run. Programs like Sage 50 allow you to keep everything you need in one place for easy access and recovery and will help you track unpaid invoices, billable hours and your budget as well as create customized invoices. Always be sure your current program is up-to-date.
Don’t mix business with personal. As your business grows, it’s important to separate your business and personal expenses. If you use personal funds to supplement your business, record them as loans or capital contributions. Your accountant can assist you with any questions you have.
Check, check and re-check. Even though your accounting software does a lot of the work for you, data entry errors still happen. Monthly reconciliation of your bank account as well as running monthly error reports can go a long way in making sure your books are as accurate as possible.
Keep an eye on inventory. Track all inventory (i.e. dates purchased, stock numbers, purchase prices, dates sold, etc). Managing your inventory will help cut down on “misplaced” items or alert you to suspicious activity or theft.
Track every expense. Avoid using cash for businesses purchases whenever possible. A credit or debit card will make tracking statements easy, plus it will help you and your employees in recording true business expenses (which is information you’ll need to know come tax time).
If expense reports are a pain in your side, Expensify integrates with Sage 50 and makes capturing receipts, tracking time or mileage, business travel and creating expense reports in a timely manner easy — for both you and your employees. Just be sure to set up a clear, published time frame for submitting expenses — whether bi-weekly, monthly, etc). When employees delay filing their expenses, not only does it hurt their pockets, it can also cause cash-flow challenges for you, not to mention associated accounting nightmares.
Make your clients pay. Sending out an invoice doesn’t always mean a check’s in the mail. Don’t let your clients avoid regular payments and always follow up on unpaid invoices. Sage 50 allows you to put an account on hold once it reaches an outstanding dollar amount (set by you) so additional orders can’t be placed. This safeguard keeps past-due clients from accidentally slipping through the cracks.
Make time for your books. Don’t get caught up in the “end of the year scramble.” You may find yourself spending hours trying to track down receipts and other documents that are several months old and that is just plain stressful. Put your bookkeeping day on the calendar and stick to it – you’ll feel much better when the end of the year rolls around.
Can’t do it all?
Running your business can be stressful enough without dealing with all the financial responsibilities that come with it. If you simply don’t have the time it takes to keep it all straight, that’s OK. Hire a part-time bookkeeper to help keep you on track with finances and payroll. Maybe there’s a financial advisor or an accountant in your area who knows your industry that you can rely on for expertise and advice when needed.