The winter can be a stressful time for small business owners, with the tax deadline looming and the post-holiday sales lull sweeping in. However, this time of year is exactly when a firm needs to be on the top of its money management game, from creating an effective financial plan to organizing a well-kept office.
Thankfully, accounting has only gotten easier over the years. There are a number of new services and solutions that make the process simpler, and there are always qualified professionals nearby to lend a helping hand. Even so, small business owners themselves should understand the ins and outs of this critical element.
In order to do just that, here are some financial tips and tricks to better manage accounting:
Always find a way to plan ahead
Unfortunately, small business owners could find themselves in a bit of trouble if they are unwilling to look to the future. This includes drafting a quality financial plan, preparing for monthly payments and predicting when capital could either dry out or pick up.
Jody Pader, CEO and president of New Vision CPA Group, wrote in an article for Entrepreneur magazine that these tenets can apply to taxes as well. For instance, small business owners should spread out their quarterly estimated tax payments on a month-to-month basis, in order to ensure that there is always money at hand. Each month, set aside the required amount of funds to prepare. This turns it into a monthly expense, so each quarter doesn't feel like such a big financial hit.
In addition, make sure that there are separate accounts for one's personal life and for the business banking, Pader explained. This step can guarantee that money won't overlap, and that it won't be tempting to dip into one or the other if funds run low. This should apply to a company's credit card as well. There should be a personal account and a business one, so expenses on each end are covered in the appropriate segment.
Focus on good organization
Most importantly, good business accounting requires a solid grasp of the basics, according to Michael Essany in a post for the Intuit Small Business Blog. Without the foundation in place, layering more advanced concepts will be nearly impossible, and a number of critical elements could slip through the cracks.
In order to make this idea simpler, owners and entrepreneurs should stay organized, Essany noted. Accurate record keeping allows for a quick and easy review of a company's finances, and planning for taxes won't provide as large of a headache. Above all else, this will reduce the likelihood of a disaster, or bring a potential problem to light before it can spiral out of control. Proper technology can help achieve this goal, too, but small business owners have to learn to trust their solutions. Just owning it is a good first step, but there is much more software can do. It will provide a sound backdrop for bookkeeping, ensuring that the data stored is safe and accurate. Technology can also streamline the process and reduce the amount of busywork.
Moreover, small business accounting has to be consistent, Essany explained. A lack of vigilance or oversight can compound issues and let vital areas go unchecked. This will make it challenging come tax-filing time, and that could even spell the end for a company's financial plan. On the other hand, solid practices and strong willpower should help a firm stay on track for longer, without running into that many money problems. From tracking sales, expenses and everything else, accounting can either be a company's best friend or its worst nightmare.