If you own and operate a small business, there’s a big bucket list of things you need to do to maintain operations and to keep afloat. No matter whether you run a retail shop or you specialise in web development, content marketing, or you’re an independent tradie plumber or electrician, all businesses need accounting.
Accounting is the ‘language’ of business, which can give you insights into your profitability, liabilities, expenditures, and cash flow. The problem for many, however, is that you’re likely busy running the day-to-day operations and creating value for your customers, so you may not have the time or resources to devote to the ‘boring’ accounting and bookkeeping tasks.
Failing to plan accordingly is planning to fail, so keep these do’s and don’ts in mind for small business accounting:
01. Do: Keep Records of All Transactions
Regardless of the sector or industry you work in, you must keep records of all business transactions. Whether it’s a printout from your point-of-sale (POS) machine in a shop or restaurant or various receipts and invoices, having a clear record of every transaction in black and white is essential for bookkeeping and for your accounting.
Keep in mind that a lot of transactions are essential for running your business, even small ones, and in many cases you can claim these as business deductions when it comes to tax time. For example, purchasing a new computer or even purchasing a business account for Skype or Zoom can often be written off as tax-deductible if used for business purposes.
02. Don’t: Mix Personal and Business Spending
This one should be somewhat obvious, but often by accident, many business owners mix personal and business spending with different bank cards or credit cards. The problem might not seem so evident at first, but come tax time it’ll create a headache when you’ve got to sort out the taxable income of yourself and of your business.
Have separate bank accounts for business and private expenses and always record any transactions between the two.
03. Do: Invest in Your Business
Investing in capital assets like machinery, supplies, and other equipment is necessary for the operation of your business, but it’s also important to invest time and resources into value creation. What this means is that you should be spending the bulk of your daily time reaching out to customers/clients, providing quality goods and services, and constantly improving your business processes.
Running your own small business is often easier said than done, but never forget the entrepreneurial spirit that turned your idea into a business in the first place.
04. Don’t: Fret About Taxes & Bookkeeping (But DO Act!)
Don’t spend too much of your valuable time worrying about taxes and bookkeeping. This isn’t to say you should ignore them completely! If you lack the expertise in taxes and/or bookkeeping, one of the best investments you can make is to outsource these important tasks to a firm that specialises in business accounting and taxation.
05. Do: Use an Accounting Firm that Adds Value
Having a trusty accountant at your side to take care of all the business bookkeeping and taxes is essential, but that’s just the bare minimum you should be looking for. Go the extra mile and choose a team of accountants and tax experts that not only keeps your business compliant but that also optimises your cash flows and reduces your taxable income in-line with rules and regulations.
Badawy Large & Powers is your best choice for accounting and tax consulting that goes beyond the day-to-day taxation and accounting requirements and adds value to your firm.
Badawy Large & Powers
Get in touch with our accountants at Badawy Large & Powers.
Read Also – 5 Reasons Why You Should Choose Us for Tax Planning