The majority of small business owners aren’t accountants. Usually, they have e background in product development, HR, management, or something else. Nevertheless, small business owners can outsource accounting services today from accounting services, such as GTA Accounting. An accountant for a small business understands the nuts and bolts of small business accounting. Thus, small business accountants successfully manage the financials for their clients. Besides, there are also some excellent accounting tips for small business owners from a small business accountant. Small business owners can stay on the right path and successfully manage their businesses while capitalizing on those tips.
10 Top Tips from a Small Business Accountant
Here are top tips for small business owners from a small business accountant:
Keep Your Business and Personal Accounts Separate:
One of the mistakes that small business owners can make is that they can mix their business and personal funds. However, they should keep their personal funds and business funds separate. For that purpose, they should have separate personal and business accounts.
Classify Your Workers Properly:
Small business owners can build a team via employees or contractors. However, employees and contractors aren’t the same. Employees are individuals that businesses have behavioural authority and financial control over with the long-term business relationships. On the other hand, contractors are people who work for a company on a project basis with control over their own schedules and business decisions. Misclassification of workers can also lead small business owners to suffer fines or penalties from the tax authority.
Calculate Your Total Labour Costs Before Your Hire:
It is also important for small business owners to calculate their total labour costs before they hire employees. Small business owners shouldn’t forget that they will have to come with funds for their employees with benefits and payroll taxes monthly. Such costs also add up faster than the small business owners may not think about. Small business owners shouldn’t put themselves in a position to cut compensation post-hire. Thus, they should calculate their labour costs before they hire employees.
Generate a Profit and Loss Statement Regularly:
A profit and loss statement summarizes the income and expenses of your company over a given period. Every public company has to generate a profit and loss statement once per quarter. Small business owners aren’t required to create them. Still, generating profit and loss statements is beneficial for small businesses, as per an accountant for a small business. Generating profit and loss statements ensures small business owners that their business is on track. As a result, they can keep working hard to meet their financial goals over time.
Always Keep Receipts to Claim Tax Deductions:
You can claim a good chunk of your company’s expenses from the tax authority. Some business expenses are fully or partially tax-deductible. Some of those expenses include meals with clients, office rent, ad campaigns., etc. Nevertheless, you will need to have receipts with you to claim such expenses.
Keep an Eye on Accounts Receivables:
Staying on top of accounts payables is important. Nonetheless, accounts payables don’t dictate the company’s survival, unlike accounts receivables. You should keep an eye on your accounts receivables. Review the total amount of outstanding revenue every month. Generally, no more than 10 or 15 percent of your accounts receivables should remain past due. Reach out to your clients weekly to ensure your receive the payments.
Invoice Accurately and Regularly:
Invoicing is a necessary part of owning a business. It may feel cumbersome and time-consuming, too. Moreover, you cannot make mistakes while sending your invoices. Make sure you accurately send your invoices and regularly send them. It will allow you to receive payments from your customers on time. Keep detailed and accurate records of your invoices.
Stay Ahead of Tax Deadlines:
Most small business owners have to pay taxes once a year. Further, not paying taxes on time can lead you to suffer tax penalties or fines. You cannot afford to bear tax penalties. Therefore, make sure you file your taxes on time and before tax deadlines.
Bring in the Expert:
Small business owners have a lot on their plates to manage. Nevertheless, they can overcome their burdens if they outsource accounting services. Outsourcing accounting services won’t also cost you an arm and a leg. Thus, you should outsource accounting services from a professional to make sure your small business accounting is highly efficient and accurate.
Deploy Accounting Software:
Use accounting software to manage accounting tasks for your business. Today, you can get access to the best accounting software for a monthly fee. Professional accounting software is easy to use with tons of accounting features.
Most small business owners aren’t accountants. Still, they can capitalize on accounting tips to manage accounting tasks for their business. Besides, the following 10 tips from an accountant for a small business are handy for small business accounting:
- Keep Your Business and Personal Accounts Separate
- Classify Your Workers Properly
- Calculate Your Total Labour Costs Before Your Hire
- Generate a Profit and Loss Statement Regularly
- Always Keep Receipts to Claim Tax Deductions
- Keep an Eye on Accounts Receivables
- Invoice Accurately and Regularly
- Stay Ahead of Tax Deadlines
- Bring in the Expert
- Deploy an Accounting Software