Few would disagree that small businesses are now under an immense amount of pressure to perform. This pressure is something that the media are happy to highlight as well; with countless stories doing the rounds at just how hard it is to survive as a new company.
It means that certain things sometimes get left to the side. In a battle to realize the latest and greatest product idea, or to stay on top of more day-to-day tasks, accounting gets left behind.
As it turns out, this is something that can help your business get through those first few years unscathed immensely. Using a company like the 3 Wise Bears is something that can unearth mistakes and create efficiencies, and this is what a lot of these young businesses crave.
In terms of specifics, today's article will jump into some advice that all small businesses should be looking to follow when it comes to their accounting practices.
Make a clear line between business and pleasure
It might all be “your money”, so to speak, but try and make sure that you have separate business and personal accounts. It might be something else that you need to think about as you start out, but when it comes to filing your accounts it will do you the world of good.
As well as the convenience-factor, this is an approach which is also important from a legal perspective. It means that your personal money isn’t going to be at risk under limited liability regulations.
Keep on top of each and every expense
Again, this next task might sound a little mundane, but it will help you with your accounting practices significantly.
Sure, gathering receipts isn't anyone's idea of fun - but it gets the job done. Every time you make any sort of payment in relation to your business, even if it's catching a bus to meet a potential client, make sure you get paper or digital evidence. This doesn't just give you a true representation on how much money you are making from a net perspective, but it will also make your job of filing expenses so much easier when it comes to your tax return.
Collect taxes when you make a sale
This next point can be hard for new businesses to come to terms with. After all, those initial days are difficult, and parting with profits from the outset is something that can really put financial stress onto your shoulders.
Of course, when it comes to taxes, this money is going to leave your account at one point in time. The mistake that a lot of business owners make is forgetting about this - meaning that at the end of the year they are left with a hefty tax bill. Don't fall into this trap by deducting taxes every time you make a sale.
Understand your tax requirements
On the subject of tax, you need to understand exactly what you need to file. This doesn't just occur from a tax bracket point of view, but also the types of expenses you can file. A lot of small business owners don't understand this and ultimately, it hinders their profits.