Accounting is and always will be a critical function of the savvy business owner, but accounting doesn’t have to be a nightmare or something to dread. It just takes a little perseverance and planning to ensure that your records are as accurate and complete as possible.
You can make yourself (and your accountant!) happy by following the six accounting tips below. Each of these activities is an “accounting best practice” and represents steps to take throughout your fiscal year.
Disclaimer: I am not an accountant. These accounting tips are based on good advice from accountants … and 28 years of business experience.
TIP 1: Keep Accurate Records
Much of your business’s day-to-day accounting can be handled and tracked via your online banking services, but what’s most important about your financial records is keeping everything in one place so you don’t have to scramble to meet a request, and for the sake of simplicity.
Online banking can track simple debits and credits to your account. However, when it comes time to accurately state how things were spent or earned, separate records absolutely must be kept. The records need to track things like how cash was spent, what things were purchased via credit card, whether reimbursements were made to employees, etc.
Everything you track will only help your accountant later on down the road — which is good news for you and your bottom line! For more information, read “Accounting Basics: What Do Small Business Owners Need to Know?”
TIP 2: Sort and File Receipts
Keeping an accurate count and file of all receipts can seem tedious, but it will save a lot of headaches in the future. It’s a laudable goal to make sure you keep all receipts related to your business, but real receipt accounting goes well beyond just retaining them.
Receipts come in all shapes and sizes, and their ink fades over time. Photocopy (or scan) receipts to a standard letter-sized page, then collate them by date to correspond with your detailed financial records. Additionally, it will really help categorize the expense (and subsequent tax deduction) if you highlight the date and make notes about the reasons for expenses on the photocopied receipt page itself.
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