For many business owners, monitoring finances and handling accounting tasks can seem like a daunting task. By proactively managing debt, receivables, expenses and taxes, your company will be on track to succeed. Here are six tips from a small business accountant that can help you build a financially fit business and a promising future.
- Keep accurate records
An accurate, well-kept set of books is key to running a successful business and it ensures you’re making more money than you’re spending. Reliable financial information helps in planning and budgeting, allows you to spot and avoid a cash flow crunch, and helps you be organized come tax time.
- Separate business from personal expenses.
Be proactive about distinguishing between business and personal expenses. Separating your spending is crucial for a few reasons, including the fact that you’ll maintain personal liability protections in case someone takes legal action against your business. It is also a way to save you time and money down the road in the case of a tax audit and year-end tax filing. Having your business financial information separated makes it easier for you to work with other parties such as lenders, investors, and accountants.
- Keep your receipts
Sales slips contain dates and expense details that can be very helpful for future reference. Properly storing your receipts and other business records can only strengthen your business and streamline its operations.
- Invoice promptly with clear terms
Sending a timely invoice is often just the beginning of the process of getting paid. It’s important that you establish clear invoice payment terms from the start, so your cash flow isn’t held up by late payments from customers. Sending out invoices immediately with clear terms will help make the receivables process efficient and less stressful. A small business accountant can recommend invoicing software to automate the process even more.
- Create profit and loss statements
Profit and loss statements can give you snapshots of the financial health of your business. With this detailed and timely data, you can see all expenses, costs and revenues your business incurs during specific dates. It can reveal timely information about your company’s ability to generate profit and can detail your records for all purchases you’ve made with your business credit cards and business checking account.
- Collect taxes at the time of sale
Always collect taxes at the time of sale to avoid paying a hefty lump tax sum at year’s end. You also won’t need to worry about incurring delayed tax payment penalties if you collect or apply them at the time of sale. A small business accountant can help you with tax planning and tax filing throughout the year.
These six tips are just a starting point to ensure your financial house is healthy and in order. Many Owners seek the guidance of small business accountants– financial, tax and business experts who offer advice on everything from tax planning to day-to-day business operations.
If your small business should need bookkeeping or other accounting services, contact Jeanine Hemingway, CPA today.
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