Managing your small business accounts
Many of us have had the dream of owning a small business. We like the idea of being our own boss or working from the comfort of our own homes. Although we gain a great deal of control by working for a small business, we also tend to loose some important things. Large companies can call on the expertise of trained professionals for things like advertising, accounting, and consulting. This is not to say that you can't call on the same people, but with limited resources you will have to make some hard decisions about what means the most to you. You won't be able to afford the same level of professional assistance, and some small businesses cannot afford it at all. One of the areas in which small businesses can really suffer is in accounting. Small businesses have a real need for good accounting but accountants are extremely pricey. If you find that your small business has a problem with accounting here are a few suggestions that should get you on the right track:
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- Although you might not be able to afford continuing services from a full time accountant or attorney, you should consider consulting one at busy times such as tax season. Always consult a lawyer and an accountant before you start your business. There are particular laws and tax forms you need to fill out before creating a business.
- Keep clear copies of all invoices and receipts. This might seem a little over the top, but if you keep your records you will always know how much has been spent and how much has come in. Receipts can be usefull for a number of reasons, not the least of which is that you might be audited at some point.
- Keep an up to date spread sheet that contains all expenditures and income. Keep a separate sheet for each account and compare them to bank account totals and statements. Always know how much money your business as and how much money it will need to spend.
- Do not allow paperwork or accounting information to pile up for weeks or months. Problems occur with accounts when people do not pay close attention to them. There could be a serious mistake or discrepancy in an account that could lead to a large loss for your business.
- Always be well prepared for tax season far in advance. One of the biggest problems that small businesses face is that they do not have the accounting power to deal with the tax season. If accounts are out of order then tax season will be a nightmare. You will find yourself staying up all night trying to piece together receipts and invoices. If you are aware of the important tax dates you should be just fine when the season roles around.
- It is also recommended that you do not have too many accounts. The more accounts the more confusing your banking and accounting. Keep a couple of major accounts and keep up to date information about them. You don't need a separate account for every part of your business. Most banks charge fees, so the fewer accounts the better.
- Be careful with credit cards. Do not treat a credit card like any other account. Credit cards can be usefull for businesses but they also can destroy them. It is better to have a cash account than a credit account if you can afford it. Credit cards have high, unpredictable interest rates, and failure to pay them can seriously decrease your credit score.
