

5 ways to simplify accounting for small businesses

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Accounting & Consulting

When you're running a small business, it can be overwhelming to keep up with taxes, invoices, accounts and a myriad of other accounting tasks.

Accounting is a time consuming process, but don't let that intimidate you. The trick is to break down the process into smaller parts that are easier to manage.

Here are five tips on how to simplify accounting for small businesses:

1. Calculate a minimum monthly profit and write down your ideal monthly profit

You need to keep proper records of all invoices and payments to get an idea of what you make in a month and to figure out how much it will take to keep your business running. This is the first step to making it happen.

Keeping track of these records will show you when invoices are paid, how long it takes customers to pay you, and if you're having difficulties collecting payments from particular customers. By keeping track you can come up with an exact number you'll need to earn each month.

2. Keep your personal and business finances separate

The biggest mistake you can make is to mix business with personal, which can keep you from knowing the true state of your finances.

Avoid using your business credit card to pay for personal expenses. Maintaining separate bank accounts for your business and personal finances will save you time in the long run and make it easier to track expenses.

3. Maintain records

It is imperative to always keep all receipts, invoices, bills, bank statements, etc. If you write down a number for office expenses today and forget to keep your receipts, a few months from now you will not remember from where that number came.

Keep your receipts and financial documents organized in a way you can easily find them, either alphabetically or by date.

4. Establish a routine

Accounting may be a dreaded task for non-accounting professionals, but it's important to stay on top of it. It's easier to do your accounting once every week than to let things build up over a few months. Set aside time each week to look at your finances, even if it's only 20 minutes.