There are so many exhilarating things about starting and running a small business, especially when you’re doing something that you really love. The fruits of your hard work reveal themselves in different ways every day, and at the end of every day you only have to answer to yourself. As every small business owner knows, there are downsides too. More often than not, one major stumbling block is finances. Accounting for a new business owner does not always come easily, and yet it is one of the most important parts to making a new business successful and profitable.
You could hire an accountant, sure. CPA firms like Burkett, Burkett & Burkett in Columbia, SC offer a wide range of accounting services to small business including developing budgets and handling taxes. However, managing your own finances may help you maintain a more realistic idea about how well you’re doing. A hands-on approach will also help you to understand a side of business that you should really get to know before you hand it off to someone else. How will you know if they’re doing a good job if you don’t grasp it yourself?
Let’s go over some simple tips to help you save some money by managing the accounting for your own small business.
DIY Accounting for Your Small Business
1. Have a system and make time for it regularly.
In order to have a handle on the money that’s going out and the money that’s coming in, you have to develop a system for tracking it. This could be something that you develop in a spreadsheet, or maybe you do a search for accounting software that’s already been developed. The advantage to the latter option is that beginners may not have a good idea of what needs to be tracked, and accounting software that’s widely-used will already have the fields – you just have to fill them in.
There’s no point in having a system, however, if you’re not using it. You need to carve “accounting time” out of your daily/weekly schedule (whatever works best) to sit down and make sure that you’re actually putting the information in. This will be very helpful down the line when you’re figuring out your taxes or trying to make a major financial decision.
2. Don’t make it personal.
Keep your business money and your personal money SEPARATE! I can’t stress this enough, because as my first business was starting up I didn’t pay attention to this. I thought it would be easy to reconcile in the end just by looking at my bank statement – but I was wrong. One of the first things you do to avoid an accounting headache is create a separate account for your business money and separate credit cards. You’ll be able to easily track everything, including deductions, with no complications. It may seem like an extra step now, but when it comes time to figure it all out you’ll thank me.
3. Spend some time on a budget.
It may seem like common sense for anyone handling money, but you’d be surprised how many people don’t take advantage of what budgeting can do for them. Put all of your excellent record keeping to good use! This is one of the best ways to make your business as profitable as possible, as soon as possible. This is also one of the reasons why we want to reconcile our expenses and profits as often as possible – so we can take a good, hard look at what’s going out and compare it to what’s coming in. Spending time on accounting every three months (or even once every month) leaves a lot of room for you to ignore the reality of your business finances. Budgeting helps you to place priority on the needs and wants of your business. That espresso machine for the breakroom might not seem so essential when you realize what you have to sacrifice to be able to afford it!
Time to Dive In!
So there you have it – the holy grail of business tips to get you started off on the right track. Accounting doesn’t have to be difficult if you can break it down to its simplest form – the fact that you want to be running your company profitably. If the simple tips above seem too daunting for you to handle, you may want to talk to someone else in the biz that has done it themselves. A mentor can sometimes give you the extra push you need to head in the right direction. Everyone’s different, and now that you’re a business owner you’ve got to do whatever it takes!
- License: Creative Commons image source
Aubrey Johnson is a freelance blogger whose writing can sometimes be found at Charlotte Business Reviews.