Accounting

Small Business Accounting

A guide to small business accounting

If you own or operate a small business, chances are you know more than a thing or two about accounting. You may not have had any desire to become an accountant before you got involved with the business, but now you don’t have much choice! Accounting is a fact of life for entrepreneurs - without it, your business simply won’t reach its full potential (and you could face some legal problems). Accounting isn’t glamorous, but it’s essential.

Here are a few tips that can make accounting less of a headache for you:

  • Keep it simple. There is no law that forces you to maintain your financial records using any specific system. All you are legally required to do is keep some kind of record that accurately reflects the income and expenses of your business. Find a system that works for you.
  • Focus on your receivables. Stay on top of any clients who owe you money. Be professional and courteous, but also very firm. Studies show that if you allow a client to delay payment for over 30 days, there’s a very good chance you won’t ever be paid. In many cases, your clients won’t be on top of their own books and they may simply forget that they owe you money. Be prepared to resend invoices.
  • Hire an accountant if you can. As soon as you can reasonably afford to hire an outside accountant, do so. Not only will this ensure that your books are kept properly, but it will free up your time for other aspects of running the business.

Accounting Software

Many small business owners purchase accounting software for their computer. This is a good idea, particularly if you don’t have any formal training in accounting. However, it’s important to do some research before you make a purchase. Don’t just buy the first program you see, even if it is recommended by someone you trust. First, make sure that it has the right features to suit your business.

Quickbooks, for example, is a top-selling small business accounting program. It has great billing features, so it’s perfect for service-oriented businesses. However, it’s lacking in features related to inventory, so it’s not the best program for a retail company.