Unlike major corporations with hundreds of employees and an army of accountants, small businesses usually don’t have the same resources. This can make keeping track of finances and ensuring that everything is up-to-date more challenging. But don’t worry – there are still plenty of ways to stay on top of your business accounting, even if you’re short on time and manpower.
Why Bookkeeping is Important for Small Businesses
Even with the casual work environment common to small businesses, keeping on top of your bookkeeping should be a priority. After all, it would be very difficult to make sound business decisions or even file taxes correctly without accurate financial records.
Additionally, maintaining effective, accurate, and detailed bookkeeping and accounting offers small businesses the chance to:
- Assess their current financial position
- Make informed decisions about future investments
- Understand where money is going and where it can be saved
- Adequately prepare for tax time
Of course, bookkeeping is only one part of the accounting process. But it’s an important one – and one that small businesses can’t afford to skimp on.
How to Do Small Business Accounting
There are a few different ways that small businesses can approach their accounting. The most common (and often most recommended) method is outsourcing the work to a professional accountant or bookkeeper. This has the added benefit of giving you access to someone with expert knowledge who can offer valuable insights and advice – something that might be difficult to come by if you’re trying to go it alone.
Another option is to use accounting software. This can be a good solution for businesses that don’t want to (or can’t afford to) outsource their accounting, but it does require a bit of initial setup and ongoing maintenance.
There are many different accounting software programs available, so it’s important to research and find one that will work well for your specific business needs. Then, once you’ve chosen a program, be sure to set aside some time to learn how to use it properly – and don’t be afraid to reach out for help if you get stuck.
Finally, you can also opt to handle your small business accounting yourself. This is generally not recommended, especially if you don’t have prior experience with accounting or bookkeeping. But if you’re willing to put in the time and effort to learn the ropes, it can be done.
The Best Accounting & Bookkeeping Practices
Regardless of whether you have hired a bookkeeping and accounting consultant, are using accounting software, or are keeping track of everything on your own, it’s vital to follow a few best practices to ensure accuracy and efficiency, including:
- Keep track of everything: No matter how small or insignificant it seems, it’s important to track not only your income and expenses but also things like inventory levels, employee hours, and petty cash spending.
- Stay organized: Create a system for yourself (or have your bookkeeper do it) and stick to it. This will make finding the information you need when you need it much easier.
- Don’t procrastinate: The sooner you enter information into your system, the less likely you are to forget something important. Make it a point to update your records regularly – ideally, at least once a week.
- Be consistent: Use the same terminology and format throughout your records. This will make them much easier to understand and work with.
The Bottom Line
Small businesses have a lot to gain from maintaining accurate and up-to-date bookkeeping and accounting records. Not only will it make things easier come tax time, but it will also give you a clear picture of your business’s financial health – which can be invaluable when it comes to making informed decisions about the future.