Accounting Basics for Small Business Owners
You may have heard of the “Cash is King” mantra, but what about the accounting “Cash is Queen”? No, cash rules the world. But when it comes to your business, accounting is the queen that keeps everything on track.
So, when you set your mind to starting or running a business, you can be assured that bookkeeping will be one of the first things on your mind.
Understanding your business’s numbers is one of the most critical parts of running a small business. It’s through bookkeeping that you can gain a true sense of where your money is coming from and where it’s going, whether or not these actions are working for you and finally, leverage these insights to make the most of your business’ financial position by making intelligent decisions to grow.
The good news is that there are ways to make bookkeeping easier and less painful to do. Here’s how you can start:
Get your banking in order
In order to avoid confusion and have a clearer view of the financial status of your business we recommend you to set up separate accounts for your business and personal finances. Your accountant will appreciate this effort on your part because it will save him time sorting through various credit card statements, checks, invoices, and other bills.
You'll be able to pay for business related expenses with your business account, thus avoiding any disputes about what is related to your business and what is not. The separation of business and personal accounts will help you realize the true scope of credits and debits in your business which is key to making good financial decisions in the future.
Monitor Your Expenses
Nowadays, all businesses must be serious about their finances in order to succeed and thrive. The practice of having all transactions, including income and expenses, recorded in a comprehensive expense tracking system is the foundation of solid business bookkeeping.
We believe that it’s a crucial step that empowers you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and legitimize your filings.
Struggling with keeping track of your expenses? We built Lipana expense tracker just for you! Our interface makes it easy to get started and our dashboard is simple and straight forward.
Invest in Accounting and Bookkeeping Software for Small Businesses
It is essential to keep your financial records organized and managed. That way, you can always access them when you need to. If you haven't taken the time to record your income, purchases and expenses yet, consider using accounting software to help you manage the data.
When it comes to accounting software, there is a wide rangeof options. At first, this can be a little intimidating. Start by considering your business objectives and then looking for tools that can assist you in achieving them. Try to choose something that is adaptable, so that when your company develops and evolves, your software may adjust as well. You'll also want to think about the price.
Keep track of all of your financial transactions
You’ve created your set of financial accounts, and picked a bookkeeping system — now it’s time to record what’s actually happening with your money. Apart from having the data for your transaction on hand, you'll need to decide which accounts that will be debited and credited, and where the corresponding entries should be posted.
Maintain your information securely
Ideally, you should keep your records straight from the beginning. And proper record-keeping makes the process easier and keeps you compliant with the law. One thing you should consider is that, regardless of the industry you are in, keeping good records is essential to running a successful business.
Automate with Lipana
Lipana is an accounting solution for small and medium enterprises it can be accessed from any smartphone or computer. You may also examine cash flows, expenses, and sales with Lipana's extensive accounting capabilities, manage invoices, and create them with our free invoice generation tool.