From launching a new service to working on business websites and hiring staff, small business owners have a lot to do. With so much to think about, it’s easy to let important tasks like bookkeeping and accounting fall to the wayside. If you’re having trouble staying on top of all the administrative work, don’t fret — there are a few simple ways to get your accounting back on track. Check out these useful tips for categorizing your business expenses, tracking your time, and invoicing clients.
Keep Personal Expenses Separate
Use a separate bank account for making personal purchases. If you don’t have a personal bank account, open one at your local bank. If your bank offers a low-fee or no-fee plan, consider opening several accounts. Separating your personal expenses from your business expenses can be a time-consuming task if you don’t stay on top of it, so keep things as easy as possible by using different accounts and cards for personal expenditure.
Get a Business Credit Card
Using a business credit card is the easiest way to keep your personal and business expenses separate. A business credit card can also help you build business credit, which is different from your personal credit. This can come in handy if you ever want to get a business loan, lower your business insurance rates, or apply for a business grant. A 2012 survey conducted by the National Small Business Association found that credit cards were the second most popular source of financing for small businesses. Whether you’re a freelancer, a sole proprietor, or a corporation, it’s worth the hassle to get business credit.
Use an Online Accounting Program
One of the top benefits of running your own business is being able to deduct business expenses from your income tax. It’s important to properly track these expenses during the fiscal year so that you can file an accurate report come tax time. Not only will tracking your business expenditure help you lower your taxes, but it can also prepare you for a potential audit. There are many online services available for tracking time and expenses. Some programs, like let you invoice clients directly from the app. If you just want a simple expense tracker, try Receipts by Wave, a free app that lets you upload images of your receipts and categorize your purchases.
Invest in a Payroll System
Whether you have five employees or a staff of 500, you’ll need to have a proper payroll system in place to keep track of your labor costs. Keep in mind that labor costs account for the majority of a small business’ expenditure. Be sure to track all labor expenses, including overtime, benefits, and perks. Pay your employees on a fixed schedule, and make sure you’re withholding the right amount of taxes.
In the digital age, there’s no excuse for using the shoebox method of organizing your business receipts. The tips above should help you get your accounting in order so you can get back to running your business.