When running an SMB there are lots of pitfalls one should watch out for, and accounting practices are one major concern. Many SMBs employ an outside accounting firm to “keep their books”, and this can be a very good idea. However, it is also wise to learn accounting basics or tips yourself. Here are a few accounting tid-bits that an SMB owner may want to know:
1. Protect your company from check fraud – Ask that your bank never cash a check made out to an individual, with the exception of payroll checks.
2 Keep up to date on all tax rules and changes in accounting rules – Government tax rules change on a regular basis. It is a good idea to keep track of these changes yourself. You should never blindly depend on your accountant.
3. Review all cost and expenses – You should review your invoices often. Don’t play catch up with your records; use them to find ways to cut costs and also to find better and cheaper suppliers. Doing this will save you money in the long run
4. Keep your business and personal accountants separated – Many business owners keep one account for personal and business finances. This can cause problems when tax time comes. Keep things separated, it will make things much more simple when it comes time to track your business finances, moreover it will make creating a personal budget less of a problem.
5. Double and triple check your numbers – Many company’s pay the same bill twice due to accounting errors, costing them large amounts of money and many hours of labor to correct. If you check, check and recheck your numbers you will catch errors before it’s too late.
6. Keep records of bills paid – Your financial records and invoices serve two purposes. One, they can be used for cost control. But two is much more important, they can also be used when tax time comes around.
7. Basic is a good thing – An accounting system should be simple and easy for you to use. Having more than one checking account when one will do can make things much harder. So keep it simple.
8. Accounting software – Accounting software is easy to use and most packages are affordable. Many of these programs, such as Quickbooks, will turn your receipts into financial reports, making it a great tool for any SMB.
9. Hire someone to help at the office – It is best to be well versed in accounting, but having someone to help you is often the best way to keep things in line. Accountants are an invaluable extra set of eyes helping to watch your money.
By: Randy Lewis