Tips to optimize accounting for small business
Small businesses often lack the resources to properly optimize their accounting procedures. However, there are several simple steps that a small business can take to improve its overall financial performance and make better use of their limited resources.
Separate business and personal expenses
One of the most important things to do is separate your personal finances from those of your business. You will need a separate bank account for your business, and it’s not a bad idea to get a credit card in the name of the business as well.
Even more than that, you should keep your work computer (and computer files) separate from your personal ones. It’s easy for taxes and accounting to become overwhelming when you can’t tell what expenses are personal or for the business when they’re all jumbled together. However, if everything is organized from the beginning and kept that way throughout, it will pay off in the end.
Automate accounting tasks, if possible
Automation is often a good friend for small businesses. If your business has the capacity to automate common tasks, it can save time and money. Automated accounting tasks can be done with software, which is relatively affordable. As long as you have someone on your finance team who has accounting knowledge, you should be able to automate some of your accounting processes without hiring an outside accountant. Automation saves money and time and also cuts down on human errors, giving you more time to do other tasks for your business.
Maintain clean and up to date financial records
It’s important for small businesses to keep well-organized, accurate financial records. Not only does it help with decision making and budgeting, but it also assists your business in complying with legal and regulatory requirements. Good financial records should be legible, organized in chronological order, and include source documents such as invoices. They should also be up-to-date so that they can be used to prepare accurate financial statements.
Ensure inventory data is accurate
It’s important to ensure your inventory data is up-to-date. Accurate stock counts are key to having a clear picture of how much money you have tied up in inventory. Having the correct information helps you determine how much cash flow is going out and what kind of profit margin exists on each individual item being sold.
If you are using software (or even a spreadsheet) to manage your inventory, keep it up-to-date by logging purchases and sales as they happen. If you’re not using any kind of tool for this, make sure the data used for reporting is accurate—whether that means checking it manually or using some other method to track it.
Regardless of your chosen method, it’s important to have an understanding of the amount of inventory on hand and the average cost per unit at all times since it allows for better business decisions across multiple departments: from accounting to sales and marketing—and more!
Set up an accounts receivable tracking system
Accounts receivable refers to the money due to your business from your customers or how much your customers owe you. These are essentially sales that haven’t been paid for yet. When you make an invoice, it doesn’t count as income until the customer actually pays you.
Managing accounts receivable is a crucial part of small business accounting, but it can be a challenge if you don’t have the right systems and processes in place for tracking invoices. For these reasons, it is highly recommended to use an invoicing service like QuickBooks Invoicing or FreshBooks that automatically notifies customers when their invoice is past due.
Contact Access Point for help with optimization
Small businesses can optimize their accounting by following the tips mentioned above. By taking these measures, you can ensure that your finances are in order and you are making the most of your available resources. If there are any questions or concerns about optimizng your accounting processes, you can talk to our experts at any time.