9 Accounting Tips for Small Businesses

how to keep books for a small business

Not having an accountant working with your business could mean you make mistakes which could cost you time and money which could have been avoided. There is a tendency when running a small business that you want to do things yourself such as tax and accounts to save money. As a small business owner, you probably know about the bookkeeping involved in running your own operations. Not only will that help you gain insight into your business growth but will back up any financial decisions you choose to make. The software must have features that allow users to set sales tax rates, apply them to invoices, and enable users to pay sales tax liability.

  • This is especially important if you process returns or store inventory in multiple locations.
  • We know, we know—that doesn’t make bookkeeping any less boring and painful.
  • Meanwhile, if you or your accountant want to become a ProAdvisor to demonstrate expertise in QuickBooks, read our article on how to become a QuickBooks ProAdvisor.
  • A source document can be something like an invoice or a canceled check that shows you paid the receipt.
  • This involves collecting and storing financial information such as receipts, invoices and bank statements.

Historical Cost

However, some businesses tend to be more profitable than others, such as luxury goods, high-end services, business-to-business companies and subscription-based businesses. If you’re not sure what type of business to start, consider your strengths and interests, as well as the needs of your target market, to help you choose a profitable business idea. Even if you’re a brick-and-mortar business, a web presence is essential. Creating a website doesn’t take long, either—you can have one done in as little as a weekend.

Manage your sales

Let’s explore the compelling reasons that underscore the significance of precision in bookkeeping. In the intricate workings of a business, accurate bookkeeping emerges as an essential function, often under appreciated yet profoundly impactful. Its role extends far beyond mere number-crunching, shaping the very foundation upon which a successful business stands.

how to keep books for a small business

Online Bookkeeping Method

If someone on your staff or an outside accountant prepares the report, review it for accuracy and keep apprised of your financial standing. As a business owner, you’re responsible for recording every expense paid from your business account. No matter the payment method used, each transaction must be recorded with the date, amount, and purpose.

Financial Reporting

We recommend using one of the kinds of bookkeeping systems that we mentioned earlier to prepare these reports because of how much time it will save you. With today’s mobile, intuitive tools, you don’t need to have an accountant’s knowledge—or hire a professional bookkeeper—to log, categorize, and match transactions. Apps like Neat free up time that you can dedicate to other tasks (like selling more of your products/services or finally watching that gerbil video your friend texted you four days ago). It’s also important to keep your personal expenses separate from your business expenses for reporting and liability reasons. Ideally, you also want to find a bookkeeper or accounting firm that has experience in your industry.

how to keep books for a small business

QuickBooks Desktop can be integrated with QuickBooks Desktop Payroll and QuickBooks Time. If you’re interested in QuickBooks Online, check out our comparison guide of QuickBooks small business bookkeeping Online plans to help you decide which is best for you. Entrepreneurs who outsource a lot of labor to freelancers or who manage most administrative tasks on their own.

Who should manage small-business bookkeeping tasks?

  • These often include features such as check writing and managing receivables and payables.
  • If you’re looking for a free tool that makes it easy to read on the go, I highly recommend using the Libby app, which you can use to borrow e-books and audiobooks from your local library.
  • Business owners who don’t want the burden of data entry can hire an online bookkeeping service.
  • However, there are plenty of reasons to make quarterly, or monthly financial statements as well.

It’s far better to take home six figures than make seven figures and only keep $80,000 of it. As your small business grows, it’s important to have a scalable business model so that you can accommodate additional customers without incurring additional costs. A scalable business model is one that can be replicated easily to serve more customers without a significant increase in expenses. New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes.

How do I do bookkeeping for my ecommerce business?

The type of insurance you need depends on your business model and what risks you face. You might need more than one type of policy, and you might need additional coverage as your business grows. In most states, workers’ compensation insurance is required by law if you have employees. This means that you need to sell at least 456 units just to cover your costs.

  • It’s a good idea to sit down from time to time and review these trends from a high-level perspective.
  • If you stick to these three golden rules, you’ll slash the hours it takes to keep clean books, save yourself a lot of headaches, and keep the cash flowing.
  • Letting transactions pile up can lead to disorganized records, mistakes, and a whole lot of unnecessary stress.
  • Provide quality digital content on your site that makes it easy for customers to find the correct answers to their questions.
  • Sales tax is added to the retail price of every online sale and is settled at checkout.

In many instances, an accountant prepares the initial chart, and the bookkeeper references it while recording transactions. Professional bookkeepers and accounting professionals are available to manage, track, and report on financial activities. For a small business, this can be a great way to get the benefits of having a dedicated bookkeeper and accountant without the need to build out your own accounting and bookkeeping department. On a regular basis, monitor your cash flow to get a solid understanding of how much capital you have available, how you’re spending it, and how to budget for any upcoming costs. Remember, it’s not just about revenue – your cash flow calculations will reveal how it compares to your expenses and what that really means for your day-to-day business.

Leave a Comment

Your email address will not be published. Required fields are marked *