Fifty percent of all new businesses fail within their first five years. If you’re starting a new business, there’s a good chance you aren’t going to make it, regardless of how passionate you are.
A big reason that businesses fail is that they are run by people who don’t understand finances and basic accounting. They start a business because they are good at creating a product or offering a service. But that doesn’t mean they are experienced in basic business management principles.
We’ve compiled a few small business accounting tips below, to give you the foundation you need to handle your business finances, project cash flow, and survive as a new business. Many new businesses use professional Accounting Hobart services to manage their business finances smartly and comply with tax requirements. Read on to ensure your small business accounting gets handled properly, so you always know where your business stands.
1. Use the Right Software
Bookkeeping is one of the most crucial aspects of accounting. One of the best and most basic accounting tips for small businesses is to use the right bookkeeping software.
By choosing software intended for small businesses, you can link it to your bank account and credit cards to automatically pull transaction data. Then, once a week, you can log into your bookkeeping software and reconcile transactions, to ensure your records are always up to date.
2. Separate Finances
Many small businesses get started with a single person; you. Even when it’s just you, it’s imperative that you separate business and personal finances. From day one, open a separate checking and savings account, and a credit card.
This makes it much easier to track expenses and project cash flow.
3. Send Professional Invoices
If you offer a service to your clients, there is a good chance you rely on invoices to get your customers to pay. But how you send invoices is crucial to your customer’s experience and your likelihood of getting paid.
Using an ugly, outdated invoice template will waste your time, and will likely be ignored by your clients as long as possible. You should take invoicing for small businesses seriously.
At the bare minimum, you can use an online invoice maker free of charge to create a professional-looking invoice that is more likely to be paid by the client.
4. Get an Accountant
Many small businesses owners make the mistake of trying to bootstrap every area of their business. But trying to save money when it comes to accounting and tax preparation may end up costing you.
One of the most important accounting tips is to hire a professional accountant as early as possible to ensure your taxes are done properly, and that you save as much as possible.
5. Choose a Tax and Legal Structure
Starting off as a sole proprietor is fine, but at some point, it’s best to form an LLC or other type of legal structure. Doing so can have tax benefits. Work with your accountant to determine the best structure for your business and industry.
Implementing Small Business Accounting Tips
There are small business accounting tips available to help you succeed in your new business. It all comes down to basic training, sticking to a budget, using the right software, and working with professionals where needed.
Doing so frees you up to focus on creating products and offering services, rather than always crunching numbers.
Looking for more business tips and tricks? Head over to our blog now to keep reading.
