The lifeblood of any business — large or small — is financial integrity. Efficiently managing your small business accounting can help determine your success. If you don’t know where to start, consider leveraging accounting software. By getting your finances in order, you will save a lot of hours, headaches, and dollars.
Getting your books organized takes a little time and effort. You need a solid plan to keep all the moving parts of your business in order. Collecting your receipts in a shoebox is not going to cut it.
How to organize your business finances
So, how will you organize your small business accounting? Here are five important steps to prepare your business for fiscal success.
1. Separate your personal and business finances
Many small business owners struggle with separating their personal and business finances. It may seem like you can commingle accounts, especially when you’re just starting your business. But, it is critical to not mix your personal transactions with your business transactions. Do your business a favor — don’t compromise in this area.
Open different checking accounts and credit cards for your business to keep finances separate. If you do not separate your finances, you will not have a clear picture of your business’s financial health.
Some of your business expenses are tax deductible. You could waste time going through miles of bank records during tax season to figure out which expenses are deductible.
2. Use small business accounting software
Cloud accounting software can make it easy for you to track your business’s transactions. You can record your expenses, revenue, payroll, and taxes right in the software. Small business accounting software will help you cut down on paper documents. It keeps your records concentrated in one place, instead of scattered around your office.
The software should calculate your financial figures (e.g., net income, gross assets). Some software companies will file and deposit taxes for you. This means you may have fewer errors in your accounting books.
Look for a user-friendly accounting software that provides great customer support. Cash basis accounting software will work for most small business owners.
3. Track every transaction
Tracking your money is key to an accurate picture of where you are financially. Many small businesses use a simple cash method to do their bookkeeping. Record every transaction you make for your business. That means you should take note each time money leaves or enters your business.
Schedule an appointment with yourself each week to review and organize your business finances. It is important to not skip this step in your bookkeeping. When you reconcile your books at the end of the year, you will be happy you kept those financial check-ins.
4. De-clutter your desk
Keeping your desk and office organized will help you stay sane and profitable. Take time to create an organizational structure within your office. When you file your receipts, bills, and bank statements, choose an alphabetical system or organize records by date.
You might want to file your records electronically. Use spreadsheets or software to track your transactions. This will keep all your records together in one place. Make sure you back up your records and use a secure server.
5. Review your books frequently
Most successful businesses have a clear understanding of their financial picture and continually plan ahead. Check your finances often and save yourself from last-minute organizing.
Have an accountant look at your books several times a year. It may be a good idea to have a professional opinion on your books, especially during tax time.
Organize your accounting
As a small business owner, you are unique. Find a way to organize your finances that fits your business. Be sure that your records are thorough and accurate. Use a consistent method to organize your finances. Your business depends on it!
Now you know how to organize your business finances, but you’ll need an easy way to do so. Keep your small business books on track with our accounting for small business. Try it for free today!
This article was updated from its original published date (10/11/2012).