As a small business owner, it’s important to prioritize accounting in order to ensure the success of your business. Maintaining balanced books allows you to better understand your past financial performance, including where you made and lost money, which can help you make more accurate financial forecasts. Here are some key accounting tips to keep your small business on track:

1. Stay on top of your receivables

   Managing your receivables is crucial for the success of your business. Instead of letting them accumulate, it’s important to track them as they come in. This will prevent you from being overwhelmed at tax time with many customer deposits to reconcile or, even worse, no payment at all. Being proactive in managing your receivables can save you time, money, and hassle in the long run. It’s important to remember that revenue doesn’t always equal cash.

2. Make cash flow statements

   A cash flow statement can give you a clear picture of the cash moving in and out of your business. By creating cash flow statements on a regular basis, such as weekly or monthly, you can better anticipate expenses and allocate income effectively. Regular cash flow statements can also help you plan for the future financial trajectory of your business.

3. Keep track of expenses

   It’s important to record every business purchase you make. One way to do this without adding extra work is to use one credit card for all business expenses. Another option is to take pictures of receipts and store them in a designated location. By keeping track of your expenses, you can avoid surprises or uncertainties about charges on your bank statement and prevent various cash flow, accounting, and tax issues.

4. Keep personal and business accounts separate

   Many small business owners use the same bank account and credit card for both personal and business expenses. However, this can make it difficult to track important business transactions. To make it easier to manage your finances, it’s recommended to have separate bank accounts and credit cards for your personal and business expenses. This can help you, your bookkeeper, and your accountant clearly see how you’re spending your money.

5. Hire a tax professional

   Nobody enjoys tax season, but it’s important to pay taxes properly. While doing your own tax preparation may seem like a good idea, it can end up costing you a lot of money in the long run if you make mistakes. Unless you are a tax expert, you may miss out on deductions or pay more or less in taxes than what you actually owe. Tax laws are constantly changing, so it’s important to stay up-to-date to avoid income tax penalties. Consider hiring a tax professional to help you navigate the process and ensure that you are paying the correct amount of taxes.

6. Stay in regular communication with your accountant and bookkeeper

   Even if you are busy, it’s important to maintain regular communication with your accounting team. Treat them as trusted business advisors who can provide valuable guidance and answers to any questions you may have about taxes, cash flow, budgeting, and more. Do not hesitate to ask for clarification if you receive an email or document with a term you do not understand. Power comes from knowledge!

At Peak Reliance, we specialize in helping small businesses like yours succeed. Our business accounting services are tailored to meet your specific needs and can include historical cleanup, bill pay, actuals-to-budget reporting, grant account management, 1099 processing and filing, and more. For more information on how we can help with your small business accounting needs, please visit our pricing page or give us a call at +1 (718) 218-5558. You can also send us an email at hi@peakreliance.co with any questions or inquiries you may have. We look forward to assisting you!