Tracking, Planning and Recording, Essential Steps for Small Business Accounting
Owning a small business requires a lot of work. One of the important things you need to do as a small business owner or contractor is to keep and manage your books properly. Here are seven tips to help you with your businesses bookkeeping.
Track Your Expenses Carefully
As a small business owner, it is important to track your expenses carefully. Many business owners make the mistake of rounding up or down. But a few dollars here or there can add up quickly in either direction. Always list the exact amount you spent and what it was spent on when doing your books.
Plan for Your Major Expenses
The second bookkeeping tip for small businesses and contractors is to always plan for major expenses. In your personal life, you set aside money when you are planning on buying a new car or going on vacation. Do the same as a business owner. Set aside money for large pieces of equipment or machinery or computer upgrades. This can help lessen the blow when the time comes to make these major purchases.
Record Your Deposits
One of the biggest mistakes you can make is not properly recording your deposits. You want to know how much money you are putting into your account and when. It helps you to balance your business budget and to ensure you have the money needed to pay the bills and expenses you have. Always carefully record your exact deposits and when they were made.
Be Sure to Set Money Aside for Taxes
Another mistake that many small business owners and contractors make is not setting money aside for taxes. When you are employed, taxes are pulled directly out of your paycheck. But when you work for yourself, you are responsible for setting this money aside. If you fail to set the money aside, you may find yourself scrambling to come up with thousands of dollars when the taxes are due. Instead, set aside an appropriate amount of money each week or month to make sure you have your taxes covered.
Pay Close Attention to Your Invoices
The fifth bookkeeping tip is to pay close attention to your invoices. When you get an invoice, always ensure that the amount is correct. If the amount is correct, set up a system to ensure you know when the bill is due and pay it on time. You may find yourself paying excess fees if the bill is not paid on time, which can harm your business.