Basic Accounting Tips for Small Businesses

Small business owners have a lot on their plate. As the owner of a small company, you have to wear a lot of hats. And one of the things that can take up a lot of energy is bookkeeping and accounting. The challenge is that whether you like it or not, the IRS will expect you to have an accurate count of your business income and expenses.

It is always wise to consider bringing in professional help, Depending on the size and complexity of the business. A pro will help you ensure that you are in full compliance, so their assistance can give you greater peace of mind as a business owner.

Whether you work with a professional or not, here are 3 basic tips every small business owner should be doing in regards to accounting:

  1. Decide what method to use: Some small business people are not even aware of the various accounting methods they can use. It is important to decide when you set up the business whether you will use cash or accrual, single or double entry, and when your fiscal year will begin.
  1. Set up an accurate expense & income recording system: If you have receipts lying all over your desk and no real record keeping system, it will be a nightmare if an audit is initiated. Scan all your receipts into your computer and organize them into relevant categories. Then keep hard copies in your file cabinets. Make sure all your expense receipts are kept in one computer file, and income in another. And of course, good accounting/bookkeeping software can be helpful in organizing your entries into a spreadsheet that makes sense.
  1. Update your records on a regular basis: Small business owners are busy people, and it can be tempting to put off your record keeping tasks for another time. And before you know it, it has been 6 months since you last reconciled your books! This is not good business practice. You need to set aside time at least once every couple weeks to update everything and make sure all the numbers add up. This way, if there is a discrepancy, it can be identified and reconciled without having to go back several months.
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