5 Accounting Tips for Small Business Owners: Imagine you run the local coffee shop on Main Street in your small town. For the most part, your days are consumed with the coffee beverages and espresso you provide to caffeine addicts. Making great coffee drinks and providing a warm, cozy atmosphere for your customers are top priorities, but the bottom line is you need to make a living. Chances are you can't hire an accountant or a financial manager to take care of bookkeeping, so these tips and tricks will help ensure that you maximize the investments for your small business.
- Open up a business account and a business credit card,
and keep it separate from your personal accounts. This helps
keep things simple, allowing you to have access to the
funds you need for your business only. Dependable options
include the American
Express business credit card, but don't forget to use
it for business expenses only. It will make things easier in
the long-run and for tracking deductible expenses.
- Record all of your transactions from the first day you
are in operation. The most basic step for bookkeeping, transaction
recording can also be an overlooked step. It is
crucial to be meticulous about your records. You can choose
to do it by pen and paper the old fashioned way, or you can
utilize software such as QuickBooks. Online options such as
Outright.com are available as well.
- Remember that you will need to file your taxes quarterly.
Self-employed tax payers don't just file their annual taxes
in January, they also have to make quarterly payments to the
government. Figure out what you will owe each quarter, and
remember to put aside the money. Consider it another bill
that you have to pay, and if it helps, invoice yourself to
help with tracking.
- Take advantage of tax credits and incentives available to
you as a small business. You might be surprised to
discover various benefits, such as child care credits,
health care and home office credits. Avoid making too many
entertainment deductions, as these can look suspicious to
- Take the time to understand the jargon of the small-business industry, or else you will easily and quickly become overwhelmed and stressed. Terms like general ledger, accrual and chart of accounts might sound like a foreign language to you, but ignoring them or making assumptions about their meaning can cost you. Resources are available to help you, including the Small Business Development Centers and the American Institute of CPAs.