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Small Business Accounting Hidden Secrets That Will Save You From Yourself

If you’re the type of person who checks your accounting twice and likes putting on your thinking cap, you’ll probably have little trouble navigating business accounting. However, even diligent, organized individuals can let details slip their minds occasionally. If you’re a small business owner or someone thinking about becoming one, it’s essential that you understand all the ins and outs of accounting from a small business perspective. There are some tricks and techniques that experienced pros know but others wouldn’t think of until it was too late. Even savvy entrepreneurs can make mistakes if they aren’t familiar with these 9 Small Business Accounting Hidden Secrets That Will Save You From Yourself

Stay Organized

Accounting is all about organization. You need to be able to find documents and information when you need it. Just like with your to-do list, if you don’t have a place for everything, you’ll waste a lot of time looking for something. If you’re not a fan of spreadsheets, you can always use online accounting platforms. There are a variety of options, so you can choose one that meets your needs and is easy to use. Learning what-if scenarios, future cash flow and other accounting techniques can also help you stay organized by keeping you focused on important things.

Track Everything

If you’re just starting out and don’t have an accounting team, it’s essential that you keep track of everything that happens in your company. If you hire employees, track their hours and expenses. If you sell products, write down the amount you made from each sale and invoice. If you’re paid by clients, make note of the amount due with each payment. If you invest in other ventures, track those amounts and the progress with each investment. If you have everything written down, you won’t have to rummage through your head to figure out what happened each day. It will also help you put together financial reports quickly and easily. It’s also a great way to start discovering accounting tricks as you’re bound to make lots of mistakes while recording everything.

Utilize Templates and Excel

Accounting is all about consistency. You need to use the same methodology to record transactions so you have accurate numbers to pull from at any time. If you’re recording sales, use the same template every time. If you track hours worked, use the same template for that as well. You’ll be able to whip up accurate reports for management, investors, and the government in no time. Invest in accounting templates and software that is compatible with Excel. This will allow you to automate certain tasks and save even more time.

Don’t Be Afraid to Ask for Help

Asking for help is a sign of strength. There is no shame in asking someone who is more experienced in accounting to take a look at your books. If you have a bookkeeper, make sure he or she knows what you’re trying to accomplish with your business. If you’re friends with an accountant, make an appointment to go over your books. Keep in mind that you don’t have to pay someone to review your books. Some accountants may be happy to do it for you for the experience.

Small Business Taxes Are Due in April

You may think that you have plenty of time to file taxes, but you should be thinking about them at least a few months before the official deadline. You need to track everything that happens in your company and figure out how much profit you made for the year. Then, you need to determine how much tax you owe. All of this will be added to your tax return. This is due on April 15th of the following year. If you miss this, it will be considered an error on your part. Invest in an accounting software that can help you track your profit and expenses and generate a tax return. You can have it delivered to you so you don’t forget.

Don’t Pay Yourself First

This is a mistake that many entrepreneurs make. You’re supposed to pay yourself last. First, pay your suppliers and employees what they are owed. Then, use the remainder of the money to pay yourself. If you don’t pay your obligations first, you may find yourself in trouble with the law and your employees. If you’re cash-strapped, you may be tempted to pay yourself first. This is not a good idea as you will eventually run out of money.

Avoid Consolidation Mistakes

If you’re opening a new branch, you may be tempted to consolidate the two companies’ books. However, this may cause you to make a mistake that could haunt you for years to come. If you have a branch in Miami and a branch in New York, don’t consolidate them into one branch in New York. This may cause you to forget about the Miami branch or vice versa. Instead, have the Miami branch and New York branch keep their own books until it’s time to merge the two companies.

Summing up

Accounting is more than just adding up numbers. It requires careful analysis and attention to detail to track everything correctly. If you’re a small business owner, you need to know all the ins and outs of accounting from a small business perspective. There are some tricks and techniques that experienced pros know but others wouldn’t think of until it was too late. All in all, accounting can be challenging and even frustrating if you don’t have the right tools or knowledge. To make sure you avoid common mistakes, use the tips above to help you get a solid grasp on the basics of accounting and make sure your business runs smoothly.