If you’re a small business owner, then chances are good you either handle your own bookkeeping and accounting, or you’ve elected to bring in outside help from a professional. Either way, there are a few accounting fundamentals that you should always keep at the front of your mind and process.
In today’s blog from George A. Spencer, CPA, P.A., we will examine seven tips that every single small business owner can make use of when managing their finances and accounting.
With over 20 years in the small business accounting and legal consulting space, George A. Spencer, CPA, P.A., has become a known and trusted name in Jacksonville. If you’re looking for help with your small business accounting or IRS dispute, we’d love to be able to help.
To learn more about our small business accounting services, visit us online to schedule a free consultation, or call us directly.
Maintain Separation Between Business Accounts And Personal Accounts
Believe it or not, the IRS is pretty picky about what you claim as a business expense and what is actually a personal expense. Sure, you may contribute funds from your personal bank account to help support or grow your business, but there needs to be a clear distinction between your money and the business’ money.
It all starts with making sure that you open a business account at a bank. We also strongly recommend using a business credit card to avoid exposing yourself to liability and risk, especially as a small business owner or LLC.
Keep Track Of Expenses (All of Them)
There is no expense in your business that is negligible. Everything you purchase for the company, all the way down to the very last paperclip should be meticulously tracked, documented, and maintained for tax purposes.
Failing to do so could leave you at a disadvantage when it comes time to document your expenses for the purposes of determining whether or not your new or small business will receive a tax refund this year.
Track Your Revenue Carefully
When it comes to small business accounting, keeping track of every incoming penny is a must. All of this revenue is taxable, and underreporting your business income will not only lead to you owing more money than you expected, but it can, and will, come with hefty fines from the IRS as well.
Setting aside daily, weekly, and monthly time to update your books is a must. Additionally, accounting software can help to make this task significantly easier and less time consuming for small business owners.
Keep A Close Eye On Payroll
The vast majority of businesses cite payroll as their single largest expense. As your business grows and you begin to offer paid time off, health insurance, and other benefits, keeping close tabs on your payroll will be crucial to maintaining a healthy business in the short and long term.
Keep Track Of Your Inventory
Many small-business owners think that an annual inventory of products, typically performed to calculate insurance, is enough work already. However, keeping a tight grasp on your inventory of goods, their costs, prices, dates purchased, and dates sold can help to prevent one of the biggest possible drains on your business — theft.
When you are keeping regular and consistent track of your inventory, you’ll catch red flags much faster and save yourself money in the long haul.
Don’t Fall Behind On Invoices
Every small business owner has been through the hassle of chasing down an account who was slow, or late to pay. Sometimes, it’s vendors who are delinquent in returning money for returned goods. Either way, no one likes chasing the money they are owed.
The best way to mitigate this kind of situation from happening too often is by being religious about sending out invoices immediately upon completion of a job. Additionally, make sure that you have a system in place that is convenient for sending follow up reminders.
Some business owners even go so far as to offer a small discount to accounts who pay early.
Hire a Professional Accountant or CPA To Help
The best move you can make as the owner of a small business that is driving consistent revenue is to hire an accountant or CPA, even if only for helping with taxes or the busy season. Just a handful of hours of support each week from a tax or finance professional can dramatically free up your time while also improving the quality of your record keeping.
Call The Team at George A. Spencer, CPA, P.A. Today
If you’re a small business owner looking for help with your small business accounting, tax planning, or legal support, the team at George A. Spencer, CPA, P.A. is here for you. We’ve successfully helped build hundreds of business just like yours by providing game-changing legal and accounting services that empower you to grow while avoiding risk.
To learn more about our many services, call us, or schedule a free consultation online.