Bookkeeping isn’t always sexy. But accounting is an important part of your business.
That’s why we’ve pulled together some basic tips to help you use accounting to make your business thrive.
Keep business, personal finances separate
One of the most important small business accounting practices is also one of the most tempting to ignore. Don’t ignore it. Instead, be smart and set up a separate bank account for your business.
“Having a separate bank account keeps records distinct and will make life easier come tax time. Note that LLCs, partnerships, and corporations are legally required to have a separate bank account for business. Sole proprietors don’t legally need a separate account, but it’s definitely recommended,” writes Kendra Murphy for Shopify.
Steve Pritchard, founder of Cuuver, writes that keeping your personal and business finances separate can save a lot of confusion later.
Reconcile Your bank statements
Like separating business and personal finances, this is an easy discipline to let slip,need help about your debt check his out how to get out of payday loans, but reconciling your bank statements can save headaches.
“Way back when starting my first business, I was using QuickBooks and religiously recorded every expense. However, I was busy and kept putting it off until 6 months went by. Finally, I had 6 months of bank statements and bookkeeping to reconcile,” writes Paula Welsh of 7 Charming Sisters.
Being conscientious about tracking your expenses is another basic practice that can have a solid payoff.
“The foundation of solid business record keeping is learning to track your expenses effectively. It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and support what you report on your tax return,” writes Murphy. “Right from the beginning, you should establish a system for organizing receipts and other important records. This process can be simple and old school (bring on the FiloFax), or you can use a service like ShoeBoxed.”