Many small business owners neglect accounting tasks and are busy allocating business resources without much evaluation. This could give rise to a grave situation that might cause the business to face shortage of funds when they need it badly. Keep a check on these back office tasks back-office tasks when run your own business.
Pay heed to these accounting tips below to maintain timely, meaningful and accurate financial information.
· Separate Your Personal Expenses From Your Business
For small business owners, things can get complicated quickly if they pay for their personal expenses from the business credit card just because it was convenient. It is important that you demonstrate being a responsible business owner and maintain separate bank and credit card accounts for business and personal expenditures. This saves you both time and effort involved in separating out the expense when you are preparing your financial statements and bookkeeping. Make sure you track all your deductible expenses related to your business in a single record.
· Rely On Accounting Professionals
Small business owners do not have the time to maintain their financial records and update them every now and then which can affect the portrayed financial standing of the company. Although just to save some dollars, they might squeeze some time out to maintain records at the expense of core business activities that deserve their attention. Accounting professionals have comprehensive knowledge of the accounting procedures, tax laws, and deductions and can save you from any penalties or inflated/understated financial figures.
· Don’t Miss Out On Accounting For Labor
If you have hired employees for your business activities, you will likely have to consider their salaries, benefits, compensation plans and overtime expenses. Labor costs represent one of the biggest costs of a business that require appropriate tracking to prevent any excessive costs and employee relationship strains. Keep a record of costs of wages, benefits, overtime and any other costs associated with labor. By doing the math, you will then be able to allocate your funds appropriately. You might even find money to pay out bonuses or increments.
· Make Sure You Collect Your Receivables
Of course, customer payments might be on top of the list but sometimes small business owners forget to consider receivables that are due at a later date. Keep proper accounting records for invoices and customer payments and make sure to collect outstanding invoices as they become due. Set reminders not to collect late payments or completely forget about collecting them.
· Review Your Financials Periodically
Even if you are too busy in your core business activities, you have to visit your statements every now and then to assess your position. Business activities have to be coordinated with the amount of money flowing into and out of the business account. With a periodic review, business owners can make holistic decisions about their company. It is also important that entrepreneurs understand how essential the cash flow is to a business so that they can plan accordingly.
Mark is writing for Powersoft Computers Ltd which has launched the first cloud Accounting Software in Cyprus, aiming to help small business and professionals