Easy and Simple tips to maintain your business accounting

Managing business and maintaining accounting and bookkeeping in an organized way is a difficult process. Especially small business and start-up business faces difficulties in managing business accounting.

It is not that every small business and start-up business reaches success. Moreover, only 30% of businesses remain in their business after 10 years of launch. It is more important to have e dedicated business flow to succeed in business.

Here are the tips to manage your accounting and bookkeeping effectively.

Accounting tips for small businesses and start-ups

To have healthy financial management businesses need to follow the below-mentioned accounting process.

Manage personal and business expenses separately

Most businesses are confused with business and personal expenses. The first step to be followed by them is, to create a business bank account for your small or start-up business. A business bank account can be created after receiving its EIN (Employer Identification Number). You can benefit more when you create a business account over a personal bank account, such as

• Tracking made easy and verified business expenditures to take benefit of tax deductions.
• Providing personal liability security by upholding business budgets distinct from personal budgets.
• Offering the line of credit that the business can utilize to protect cash gaps.

As a business, it is healthy for you to open a credit card account, savings account, merchant services account, and checking account, this will permit your business to accept both credit and debit card transactions from various customers.

Use bookkeeping software or bookkeeper

Sometimes you may feel as if you can manage your business accounting and bookkeeping on your own. But once your start growing, it’s really hard for you to focus on it. 

Bookkeeping is the process of tracking all your business income and expenses in an organized way. It is a critical element of the business, and you must have it in an organized way to make suitable business decisions. 

It’s true, that most business owners are not skilled in accounting. They need to hire an accountant. It might be time-consuming and costs a little bit expensive for business. So, they can try using some simple accounting software as it automates the process of bookkeeping, by eliminating the time and possibilities of error. Further, you can manage all your financial statements on your own without dependency. Trying accounting software to manage a business is a suitable idea for small businesses and start-up businesses.

Develop a budget

The first step when preparing your business plan is arriving with an earnings projection and a list of expected expenses, and then comparing that budget to actual expenditures and earnings. So, for a healthy business plan, you need organized accounting and bookkeeping. 

Note: Check out myplan for business budgeting and financial forecasting software.

Bypass cash transactions whenever possible

To maintain the business account more healthily, avoid cash transactions on hand. The reason behind this is, that this type of cash is difficult to track and you might miss any of the payments. This makes it hard for you to manage the business account. 

Also, an expense that is paid in cash might find hard for people to track and sometimes feel tricky and time-consuming to reconcile the outgoing cash receipts. So, always it is preferred to use digital payments, online cheques, or online banking services so that businesses can track all these business expenses effectively. 

Manage the solid tracking of accounts payable and accounts receivable

To track and manage your business account, people need to track their accounts payable and receivable continuously. 

Accounts Receivable is nothing but the balance amount from the customer side after the customer receives the product or service from the firm. In this case, the amount is not paid by the customers. On the balance sheet, the accounts receivable is mentioned as a current asset. With a suitable receivable tracking method, it assists businessers to track and manage when their customers have paid, and who are all not paid with their outstanding payments. Also, a businesser can get paid faster from both profitable customers and non-profitable customers. With this, you can maintain a smooth cash flow for every month and will improve your financial health metrics. 

Accounts payable are nothing but short-term liabilities, which are required to be observed within a particular date. Any late payments will draw extra charges, in the state of interest and subsequent payment charges. Further, this late payment might create misery between both groups and slowly might affect the business credibility, which results in supply disruption. 

So, maintaining the accounts payable will assist businessers to make sure that more business is not being delayed or duplicated on the supplier payments. 

Accurate business records

As a start-up business or small business recordkeeping is more important. There is free accounting software that automates your process of recordkeeping and can digitally store financial records. So, you can easily record the cash, period, location, and purpose of the business transaction when you declare expenses as tax deductions. 

Pick the suitable accounting method

It is essential for a business to choose the type of accounting method that has to proceed with. It will take your business a long way. Further, this will deliver a uniform accounting method for tax objectives.

One of the methods called cash basis accounting can be more direct to handle for small businesses. It is because revenue is documented when you receive payment. Also, expenditures are subtracted when the cash comes out of your business account. 

 Accrual accounting documents your business sales, when a service is offered, or when the goods are shipped. In a retail business setting, a sale is determined on purchase period, and in different industries revenue may not be documented after the sales get completed for more weeks or even months. Thus, this type of method needs double-entry bookkeeping. As accrual accounting takes a more amount of time, it shows a better view of company health. 

Manage books up to date without delay

To estimate the financial health of your business, it is necessary to update the books on time. Invoice capturing and receipt automation is one of the best ways to make sure that books are consistently updated. While using the accounting software, don’t fail to link back your bank account with the accounting software.

Optimize AP terms and invoicing

To carry on to cash for a long way for your business, carry the benefit of credit terms from essential suppliers. Make sure to pay your bills on a schedule, which will help you to boost your cash flow, when having the right chance, pay before with sellers, who might offer a discount if you pay on or before time. Encourage customers and do more to make the payment. This might feel hard, following so you have a great benefit. 

As a small business owner, when you utilize the accounting software for small businesses, you can automate your process of invoicing, by sending bills automatically without delay, and can have follow-up reminders that could also control your outstanding invoices from stacking up.

Always have an eye on high-cost expenses

Inventory and labor cost some of the huge expenses for most small businesses. Most start-ups and small businesses think of it as a pro tip, they will look for contractors to work for them and will pay them based on working hours. Hiring an accountant on a monthly-based salary is comparatively looks expensive to contractor accountant fees. It works and reduces the expense for businesses.

Maintain inventory records

Inventory is the heart of businesses like retailers. When it comes to inventory, managing them is a hard process. There are lots of key elements to track, such as — an amount that is lost to obsolete inventory, inventory turnover ratio, inventory write-off, inventory shrinkage, inventory write-down, days in inventory, and more. So, it is also important to have an eye on inventory. Using mybooks for inventory management is a great choice. It holds the best features to make business efficient.