SOURCE: RIGHT MIX MARKETING

Hav­ing a good account­ing sys­tem in place is a fun­da­men­tal part of run­ning a suc­cess­ful busi­ness. Account­ing, they say, is the lan­guage of busi­ness. We think of it more like vitals. Know­ing where your busi­ness stands finan­cial­ly is cru­cial for growth and longevi­ty. It allows you to mea­sure your prof­its, iden­ti­fy weak­ness­es, and mea­sure whether or not you are on track to meet your finan­cial goals. Hav­ing the right sys­tems and process­es in place can make a huge dif­fer­ence when it comes to your account­ing; sav­ing you time and mon­ey, allow­ing you to bet­ter man­age your busi­ness.

As tech­nol­o­gy improves each day, there are new and improved ways to bet­ter han­dle your account­ing, for exam­ple, expense track­ing by sim­ply snap­ping pic­tures of receipts, or using a cloud-based account­ing pro­gram that gives you access to your finan­cial records any­where you go. Its improve­ments like these that can help you bet­ter man­age your busi­ness.

#1 Keep Accurate Records

Part of man­ag­ing your finan­cial accounts is keep­ing track of all trans­ac­tions, income, and expens­es. Keep detailed records of clients, dates of trans­ac­tions, ven­dors, and busi­ness expens­es. This infor­ma­tion is impor­tant to have on hand for tax pur­pos­es, and as insur­ance in the event of an IRS audit. In addi­tion, expense track­ing is nec­es­sary in order to qual­i­fy for tax deduc­tions.

#2 Go Paperless

Going paper­less with your account­ing is not only a great option for reduc­ing your car­bon foot­print, but it reduces clut­ter and allows you to stay bet­ter orga­nized. You can uti­lize sev­er­al receipt track­ing apps to snap pic­tures of your receipts with your smart­phone while you are out. Many of these apps will auto­mat­i­cal­ly cat­e­go­rize the expense for you, sav­ing you time and keep­ing you orga­nized. Then when you need to com­pile the infor­ma­tion, for exam­ple, to close out your tax year, the infor­ma­tion is read­i­ly avail­able to you. No more over­flow­ing fil­ing cab­i­nets or shoe­box­es of receipts that you have to sift through.

GOING PAPERLESS

#3 Create Business Accounts

One of the most impor­tant account­ing tips is to cre­ate sep­a­rate busi­ness accounts for your busi­ness, regard­less of the size of your oper­a­tion. This is the best way to keep track of your busi­ness expens­es and prof­its and keep things more sim­ple and straight­for­ward.

#4 Never Commingle Monies – Keep Business and Personal Separate

This is why you need a sep­a­rate busi­ness account, you don’t want to com­min­gle busi­ness mon­ey expens­es with per­son­al mon­ey and expens­es. This can cre­ate a lot of con­fu­sion, and lead to a lot of prob­lems with bal­anc­ing your books. Stay orga­nized and pre­vent an account­ing headache by using sep­a­rate bank accounts and cred­it cards for your busi­ness.

#5 Stay On Top Of AR/AP

Accounts receiv­able and accounts payable are two very impor­tant aspects of your account­ing. Do you reg­u­lar­ly send out invoic­es to clients? These invoic­es need to be sent out on time, col­lect­ed on time and fol­lowed upon. Fail­ure to do so can result in a loss of income. A way to make this process eas­i­er is to uti­lize elec­tron­ic pay­ments and online invoic­ing. This makes the whole process eas­i­er for you and your client. In addi­tion, it is impor­tant to always pay your bills on time. Pay­ing bills late can result in late fees and affect your busi­ness rep­u­ta­tion and cred­it score. To stay on top of accounts receivable/account payable ded­i­cate a time slot to han­dle this.

#6 File The Correct Tax Forms On Time

As a busi­ness own­er, there are cer­tain respon­si­bil­i­ties that must be done. FIl­ing the cor­rect tax forms on time is one of them. You may auto­mat­i­cal­ly be think­ing about your tax return, and yes that is the big one, how­ev­er, there are oth­er forms you may need to sub­mit as well, name­ly 1099’s. 1099’s must be sub­mit­ted if you work with out­side con­trac­tors who you pay more than $600. Since they are con­sid­ered self-employed, the IRS wants to income report­ed to them. 1099s must be issued before Jan­u­ary 31.

In addi­tion, as a self-employed indi­vid­ual, you may be required to pay esti­mat­ed tax­es. Esti­mat­ed tax­es are due if you expect to owe more than $1,000 in tax­es. Esti­mat­ed tax­es, also known as quar­ter­ly tax­es, are due every quar­ter start­ing in April. The due dates for your quar­ter­ly tax­es are as fol­lows: April 15, June 15, Sept. 15, and Jan. 15. The amount owed can be cal­cu­lat­ed based on the pre­vi­ous year’s tax return. Sim­ply take the total amount paid, and divide by 4. This will give an amount to pay for each quar­ter. It is impor­tant to stay on top of your esti­mat­ed tax­es to avoid unnec­es­sary penal­ties. Hav­ing a good account­ing process in place can help make the process eas­i­er.

#7 Use The Right Accounting Software

Hav­ing the right account­ing soft­ware is a real­ly impor­tant account­ing tip that can make a huge dif­fer­ence. There are sev­er­al good options when it comes to account­ing soft­ware. A few of our favorites are Quick­books and Xero. Both offer an impres­sive list of fea­tures, and since they are cloud-based, they are also avail­able on mobile devices. This allows you to bet­ter man­age your busi­ness while on the go, giv­ing you access to invoic­ing, bill pay, expense track­ing, and impor­tant finan­cial infor­ma­tion every­where you go. So which account­ing app is right for you?

  • Quick­books – Quick­books boasts a strong rep­u­ta­tion. They have been around for a long time and is prob­a­bly the most well-known account­ing soft­ware. Quick­books offers sev­er­al dif­fer­ent mem­ber­ships, vary­ing in price from $10-$30 per month. Some things that make Quick­books a great choice are: their invoic­es offer a lot of cus­tomiz­able fea­tures & built-in pack­ing slips, their lend­ing fea­tures, and their straight­for­ward and easy to under­stand inter­face.
  • Xero – While Xero hasn’t been around near­ly as long as Quick­books, they have gained some trac­tion in recent years. One of their draws is their more sleek & mod­ern inter­face, as well as their unprece­dent­ed secu­ri­ty rep­u­ta­tion, and they offer over 700 inte­gra­tions. Xero is also afford­able with plans rang­ing from $9-$60 per month.

A Few Bonus Tips

Some oth­er account­ing tips that can help you bet­ter man­age your busi­ness include:

  • Have a Sys­tem in place:- Stream­lin­ing your account­ing process is real­ly impor­tant. It makes the whole process a lot eas­i­er, which in the end makes it more like­ly to get done. One of the biggest mis­takes peo­ple make with their account­ing is not mak­ing it a pri­or­i­ty. Putting things off will only make mat­ters worse and take longer in the long run.
  • Know the Tax Laws In Your Area: – Anoth­er impor­tant account­ing tip is to famil­iar­ize your­self with the var­i­ous tax laws in your area. Tax laws vary from state to state, as well as city to city. Liv­ing in Cal­i­for­nia but sell­ing in 20 states? You may need to file in all of them, depend­ing on new rules.
  • Seek Expert Advice:-  Last­ly, don’t hes­i­tate to seek the advice of a tax advi­sor, espe­cial­ly if you have a com­pli­cat­ed sit­u­a­tion or you get stuck. Some­times, one of the best things you can do for your busi­ness is to know when to ask for help. This ensures that you get things done cor­rect­ly and avoid any cost­ly mis­takes. It can also save you time, which in the long run, can help you bet­ter man­age your busi­ness.

Prop­er account­ing is impor­tant because it not only makes prepar­ing and fil­ing your tax­es eas­i­er, but it can help you with bud­get­ing and fore­cast­ing as well. In addi­tion, it can also help you set and achieve both short term and long term goals for your busi­ness.