Best Small Business Accounting and Bookkeeping Tips

Effortless Ways To Earn Money

Learn more about the best small business accounting and bookkeeping tips you can employ on your own venture.

As a small business owner, you play several roles in your company. You’re usually the manager, sales leader, customer service head, and, in some cases, the accountant and bookkeeper all at the same time. You have lots of things to focus on in order to grow your business and make it a great success. But, despite all of these responsibilities, keeping your company’s records should always be one of your top priorities.

Unless you’re an experienced accountant or bookkeeper, you need to equip yourself with the basic accounting and bookkeeping skills in order to efficiently handle the financial aspect of your company.

So, keep reading this article to learn more about the best small business accounting and bookkeeping tips you can employ on your own venture.

Know The Basic Bookkeeping And Accounting Lingo

Unless you’re running an accounting and bookkeeping business, you’re probably unfamiliar with its terms and lingo. However, knowing the necessary bookkeeping and accounting lingo is essential when it comes to managing the financial affairs of your business. 


Want Free Money?

  • Aspiration: Want to get spotted a $150 for free? Simply sign up for Aspiration, and the free banking app will give you cash for free, you just relax while it gives you $150 just for opening a new debit card. There’s no catch. This bank account is legit and only takes two minutes to sign up for an account.

Although you have an accountant and bookkeeper on your side, it’s best if you’re familiar with how the terms are being used in every financial transaction. Sales, account receivable, asset, liability–understanding all of these concepts and other technical terms can help you get the most out of your accounting and bookkeeping system. 

Create The Three Must-Have Documents For Financial Success

Aside from knowing and understanding the key terms, it’s also crucial that you know how to use them in real life. Primarily, putting them into use can help you determine what’s actually going on with the financial aspect of your small business. You can do this by making the three must-have financial documents that would ensure your venture’s triumph in the industry to which it belongs.

The said documents include:

  • Cash Flow Statement – This accounting and bookkeeping document can help you figure out where your company’s cash flow is going. With this statement, you’ll know how much profit your small business is making every day, and the amount of investment you’ve made and are paying off. 
  • Balance Sheet – This document outlines the worth of your small business. In short, a balance sheet provides a breakdown of how much assets, equity, and liability your company has. By simply looking at the sheet, you’ll know all the things that you owe and own. 
  • Profit And Loss – This document outlines how profitable your small business is. When you review it, you’ll know how much profit or losses you generate over a specified period. Because of this, it’ll be much easier to lower your business expenses and determine your company’s financial future. 

Separate Business And Personal Expenses

When it comes to small business accounting and bookkeeping, combining your personal and business expenses may not be a great idea. This situation will definitely result in substantial tax problems in the future. While it’s understandable to co-mingle expenses during startups, you have to separate your business and personal expenses as soon as you establish your official business brand.

Right at that moment, it’s best to open a separate bank account for your business needs. Also, don’t forget to get a business credit card to help your company set its good credit score, which is distinct and separate from your personal credit score. If you have employees that also need to make purchases for your business, consider using a spend management solution like Spendesk. They offer both virtual and physical debit cards to easily keep track of employee spending.

Track Every Business Expense

By now, you already have your business bank account working for you. That’s why there’s no more reason for you not to keep track of every expense your small company makes. Make sure to secure and keep all your receipts, and create a detailed record of all your business expenses. That way, you’ll know what types of costs you can deduct during tax season.

Moreover, if you’re looking for an easy way to do expense tracking, make use of a business credit card for every business purchase you make. 

Save Important Bookkeeping Records

Dealing with the financial affairs of your small business isn’t easy. And, without proper bookkeeping records in place, you may find yourself in trouble, especially when it comes to matters concerning tax.

With that being said, you always need to save essential bookkeeping records and other documents if you want something to be deducted from your taxes and other expenses. These records may include invoices, bank statements, deposit slips, sales receipts, tax returns, and many more.

Fortunately, in today’s world, saving essential records can already be done digitally. For example, there’s a variety of accounting software, like Wave, that you can use to generate online invoices and other documents. Because of technology, these records can be safely saved on the software itself and be accessed anytime.

Lastly, if you want a digital copy of your physical documents, scan and store them in an encrypted, protected file on your computer. That way, you can have quick and easy access to them anytime you want.

Be Prepared For Major Expenses

Generally, you have your accounting and bookkeeping documents to help determine the financial future of your small business. However, just like other business affairs, nobody can predict what may happen to your company in the coming years. 

Given these circumstances, it’s always important to keep a part of your profits for your savings. Make sure to keep an emergency fund that can cover any unexpected expenses that may come your way. Also, don’t ever drown your business into debts. When you operate without them, your venture will become more profitable in the long run. 

Get The Right Accounting Method

Getting the most out of accounting and bookkeeping will be much easier if you’re able to employ the right method. By using the proper accounting method, you’ll know how to properly organize and track your revenue and business expenses. 

Below are the two common types of accounting method: 

  • Accrual Accounting Method – This method is beneficial for small businesses with lengthy business cycles. The income is recorded regardless of whether the cash is right away collected or not. In short, if the collection of money from the customers takes a long time, using the accrual method of accounting can be the best way to go. 
  • Cash Basis Accounting Method – This is the most convenient method you can use for your company. Unlike the accrual method, you don’t need to wait for an extended period of time before you can have a real-time view and access to cash flow. Once you receive the cash from the customer, you can thereafter record it as income in your book.  

Prepare For Personal And Business Taxes

When running a small business, you really have to get yourself prepared for the payment of major taxes. Since the preparation process can be challenging, it’s essential to have these things ready before the expiration of the deadlines. By doing this, you can avoid any mistakes that may cause big trouble for your business. 

To have a better understanding of how personal and business taxes are prepared, you need to be familiar with some common taxes you’re going to deal with throughout the year. These may include the income tax, payroll tax, and sales tax. 

However, if you don’t know where to start, hiring a professional accountant can help you prepare both your personal and business taxes. 

Final Thoughts

Indeed, without proper knowledge and experience, handling accounting and bookkeeping matters for your small business can be a complicated undertaking. However, by keeping the above-mentioned tips in mind, you’re able to increase your chances of achieving growth and financial success in no time. 

GoDescription
aspiration

Want Free Money?
Aspiration

Simply sign up for Aspiration, and the free banking app will give you cash for free, you just relax while it gives you $100 just for opening a new debit card. There’s no catch. This bank account is legit and only takes two minutes to sign up for an account.

Learn more


The Best Apps to Save You Real Money

We are on our phone a lot, right? Wouldn't it make sense to save money with the best money saving apps?

AppAt a glancedownload
aspirationAspiration
★★★★★
Get a $100 bonus at Aspiration when you open and fund an account with $10 or more. Then use your Aspiration debit card to make at least $1,000 worth of cumulative transactions within 60 days of account opening.
CLAIM $100 BONUS
robinhoodRobinhood
★★★★★
Open a new account in the next 24 hours and you could get up to $200 in reward stocks.
CLAIM REWARDS
Truebill reviewTruebill
★★★★★
This free app delivers on its promise to save you money effortlessly. You can use it to lower your bills, cancel unwanted subscriptions and bill negotiations.
SLASH YOUR BILLS

About the author

Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

On a similar note...

Explore More On

Offers Expiring Soon

ImageDescription
aspiration★★★★★

COLLECT $150 BONUS
This Company Will Give You $150 for Opening a Free Account - Boost your savings and earn up to 1.00% APY interest on your savings. Get up to 10% cash back on your purchases. Get $150 bonus when you spend your first $1,000 with your new Aspiration Plus Card.
sofi★★★★★

GET $100 BONUS
Get Your Paycheck Early - Set up direct deposit to automatically get your paycheck up to two days early every time you get paid.
personal capital★★★★★

GET FREE STOCK
Get Up $200 in Free Stock for Joining - Commission-free stock, ETF and options trades. Get a free stock worth up to $200 when joining (must complete application). Simple, easy to use investor platform with no account minimums.
personal capital★★★★★

SIGN UP FREE
The Smart and Free Way to Manage Your Money - Take control of your finances with the perfect union of technology and highly personalized service. Get access to free online financial tools, including retirement planner, investment checkup, net worth calculator and more. Digital-first wealth management advisor with 24,000 clients in 50 states.
personal capital★★★★★


CLAIM $250 BONUS
The First and Only Interest Earning Crypto Account - Receive up to $250 Bitcoin bonus when you make qualifying deposits over the first 30 days. Receive up to 8.6% annually on your crypto. Join the most trusted financial services for crypto investors on the market.
blooom★★★★★

GET FREE CHECKUP
401K and IRA Management - Start your free 401k and IRA management now. Find and reduce hidden fees. Improve your diversification.
cit★★★★★

OPEN ACCOUNT
Enjoy the Benefits of a CIT Bank Money Market Account - A CIT Bank Money Market Account helps you get more from your savings with interest rates for maximum growth. Earn over 7x the national average with high-interest rates. It now pays to open a money market account with CIT Bank.
My Millennial Guide