Owning a small business is a lot of responsibility. You need to make a profit (and quickly) to support yourself as well as your family.
Many people hate to think about the paperwork that comes with the money coming in and going out. However, it is a very important part of owning a business.
Here are some tips for managing the accounting of your small business:
- It is important to keep your business paperwork and expenses separate from your personal accounts. You should have a checking account and a credit card that you only use for your business transactions. This will make it easier at tax time if you did not keep good records all year long.
- You need to figure out a system for doing your accounting. You should come up with a way to do things. You need a system for doing invoices, paying bills, and maintaining your accounting paperwork. Whether you choose to use a program or do things by hand, it is important to find a way that works for you.
- You should get a list of things that are deductible but do not go overboard. Many things can be deducted such as your office supplies, gas (if you drive somewhere on business), and even some of the mortgage for your home office. However, you do need to be careful when you are deducting. If you use your home office for other reasons, it might not be deductible. Also, if you go out to dinner to spend time with friends and you talk about your business, it may not be deductible.
- When you don’t know, get help. It might be very important to hire an accountant to get your business started, especially when you are not sure what you are doing. This person can help with what papers you need to keep and how to keep track. They will also be able to help you with deductibles and will be wonderful help during tax season.
- It is important to stay on top of paperwork. Many people dread their paperwork so they let it pile up until it becomes unmanageable. Instead, you should set aside dedicated time to work on it so that it does not get too overwhelming. You might have enough that you need to work on it daily while others can do it once a week. Saving paperwork and time is always helpful when running a business of any size. We recommend utilizing an online accounting software program where you can enter and track sales and expenses, create invoices and more.
- That being said, you need to put money aside for taxes. You will probably have to pay quarterly taxes so it is important to save some money for that reason. Also, you don’t want to realize in April that you need to pay taxes on your earnings and have no money to pay the IRS.
Managing your accounting can be a challenge. However, it is very important to find a system and stay on top of your paperwork. You should keep your personal and business paperwork separate. You also need to figure out what can be deducted and what can’t. Sometimes, it helps to hire someone to get you started. You should always set aside money so you do not get surprised at tax time.