We've consulted with experts and scoured the web to find the top five accounting tips that every small business can benefit from. Many of these apply to middle or large size businesses as well.
Even if these tips seem basic or simple, consider how and where they are being applied to your business.
1. Keep accounts separate
Business owners, and even managers or executives with access to credit cards, need to be realistic in their usage of personal and business funds for the appropriate reason.
The easiest way to track this is that, on every level of business even when starting out as a sole proprietor - keep the funds separate. Separate accounts for separate uses. This avoids having to pay the business back for personal expenses, and vice versa.
Keep this strategy as the company becomes an enterprise-scale - separate cards and partitioned accounts for different departments or categories of expenses makes life much easier come the end of the year.
2. Stay on top of receivables
In a small or mid-size business, often there is cross-department responsibility placed on several people, and deadlines can be very hectic when trying to collect money from vendors.
Often, invoices will be missed and paid late, or not paid at all - this costs your business money!
At tax time you’re left with a bunch of customer deposits sitting in your revenue account and a receivables report that doesn’t make sense. The consequences? Hours wasted updating the receivables listing, overpaying on your taxes, and high bad debts. Making it a point to follow up on your receivables—and apply payments to invoices on a monthly basis—can save you tons of resources in the long run.
3. Hire a professional to do taxes
Most business owners, especially when starting out, are concerned about saving money. This leads to instances of the owner performing many of the tasks themselves.
Taxes is simply one of those instances where as soon as possible, hire a professional.
Spending the money to hire a professional means you'll have an expert who knows what they're doing - which ultimately saves you money in the long run. Isn't that the goal?
4. Consider your people
Be realistic about your most expensive resource - labor.
Whether it's from hiring on employees, independent contractors, or even outside companies and firms, labor is the single most expensive resource you have.
This means that labor becomes a serious cost and responsibility for the accounting department in your company - between paperwork, payroll, tax forms and onboarding, this is a serious added responsibility. Make sure that the accounting department scales appropriately to the labor in your organization as well.
5. Automate where possible to increase efficiency
One of the biggest tips mentioned in blogs and advice columns across industry is to take advantage of software and Accounts Payable automation solutions.
With the variety of technologies available today to the average accounting department, it's easy to prepare for enterprise level scaling early, and get best practices in place today.
SaaS options for previously expensive software solutions are creating new opportunities for business to upgrade and expand early, and automate a large portion of their electronic accounting services and systems.