There’s no time for play when it comes to small business finances. About 80 percent of the small businesses that fail can trace the reason for their failure to something finance-related. It could be a lack of revenues, poor cash flow management, or even outright financial mismanagement or embezzlement.
As a business owner, financial responsibility starts and stops at your desk. It’s your job to ensure you’re properly managing the financial resources of your company.
One way to do this is to master the art and science of small business accounting. We’re sharing top accounting advice that’ll help you run a financially-sound enterprise.
Let’s crunch it!
Pursuing an accounting course isn’t what you envisioned when you were starting your business, but here we are. A major reason most small business owners mismanage business finances is they don’t know how to go about it.
This is because financial management or accounting/bookkeeping is a professional skill. Unless you’re trained to manage finances, you’ll likely suck at it. So, learning accounting is the best piece of accounting advice any small business owner can get. You’ll learn the basics of bookkeeping, accounting best practices, financial statements, taxation, and more.
This knowledge will be invaluable for your business. See https://cassmerward.com/5-incredible-benefits-of-learning-accounting-for-your-small-business/ if you’re in doubt.
And no, we’re not saying you go to college and pursue a bachelor’s degree in accounting – although that wouldn’t hurt. There are short accounting courses that will give you the foundational knowledge of accounting you need to manage your business’s finances.
Separate Personal Finances from Business Finances
Roughly 20 percent of small business owners use the same checking account for personal and business finances.
This is understandable, especially if you’re a sole proprietor. You don’t see the need to open a separate business account when you’re solely responsible for the business.
However, this is an accounting sin. You’re likely to mismanage business finances when they’re sharing an account with your personal funds. Imagine going for a vacation and spending money from your checking account. You could easily burn through your personal money and start eating into business funds.
With one bank account, it can be impossible to monitor business cashflows. Sorting through business and personal payments isn’t an easy task, even when you have a whole day to do it.
So, it’s time to open a separate checking account for your business. In addition to being able to track business finances better, you’ll enable your business to build its own financial history, which will come in handy when you need to access business credit.
Hire a Bookkeeper
Why do small businesses take so long to hire a full-time bookkeeper?
Some owners feel they’re capable of keeping the books prudently – which certainly can be the case if you have done an accounting course. Others simply don’t have the budget to have a bookkeeper on staff.
In the grand scheme of things, your reason doesn’t matter. A bookkeeper has to be one of the first hires for any new business. Having a professional who’s dedicated to bookkeeping ensures your business starts on the right financial footing.
Practical Small Business Accounting Advice
Proper small business accounting should be at the heart of your operations. With this advice, you now know what you can do to ensure every dollar your business earns or spends is accounted for. Implement it.
Browse through our blog for more practical small business advice.