Summer is half over. The days are getting shorter.
Parents are preparing to send their children back to school next month.
This season, as we know it, is coming to a close. Pretty soon, we are all back from vacation, kids have returned to school, Labor Day is over and the next holiday is Thanksgiving, months from now.
The end of summer can be a drag.
However, as a business owner, you can do some things now during these low-key summer days, that will benefit you, your employees, your clients and other stakeholders (i.e. The IRS). So, take some time now and do these small business accounting practices that will keep you ahead of the game before the cooler days of fall hit:
- Business and Personal bank accounts need to be separated: Much of the confusion and stress business owners have in accounting has to do with bank accounts. If you are using your business account also as your personal bank account, you will run into some serious tax issues that could take many hours and days to untangle when tax time comes around. So, create separate bank accounts for each and save yourself lots of confusion and billable hours with your accountant (or worse, an IRS auditor).
- Record bank deposits accurately: Make sure all loans, sales, refunds and other receipts are recorded accurately. You may have to set up a meeting with the small business account specialist at your bank to make sure you are doing it correctly. They can go through each monthly statement with you. Your accountant can also advise you on the best accounting program to use.
- Record all business expenses: During a typical business year, your company could be spending thousands (or more) in expenses. From inventory to travel to fuel to rent, there are many business expenses that need to be recorded accurately and backed up with receipts. Make sure you and your administrator(s) are tracking all expenses. Many business expenses are tax-deductible, so failing to record them could be costly.
- Bring in an outside accounting expert: Accounting and bookkeeping can be agonizing and time-consuming. So, perhaps, once a month or once a quarter, hire an accountant to take a few hours and review the books. They can make recommendations and corrections, keeping your company on track.
- Set aside time for accounting: It all will pile up very quickly and become a monster if you don’t watch out. So, set a day and time each week or month to record and file receipts or visit the bank.
- Labor expense tracking: This is the largest expense for most companies. Keep track of hours paid, overtime, bonuses and other expenses to make sure you are paying your employees accurately.
- Inventory control: You may have a warehouse full of inventory. If so, take time to record all of the items in your inventory, including items that are being returned to the manufacturer/supplier.
- Meet with your administrator monthly: If your company has a staff member dedicated to accounting, meet with them monthly or regularly to review statements. It may be quite boring to do, but it keeps you and your admin on top of the bottom line: expenses and income. After all, that is why you are in business!
Poor accounting practices have damaged or sunk many businesses. Just doing even a few of these tasks will keep you and your business on track and successful.
A.K. Burton, PC, which serves the Washington,D.C. and Bethesda, Md area, has experienced and licensed individual financial advisers who can help you sort through your bookkeeping. Contact us at (301) 365-1974 for more information or email us at email@example.com.