4 Accounting Tips for Small Businesses

Pittsburgh Business AccountingYou certainly wouldn’t trust a doctor who ignores vital signs and just plunges in head-first. Unfortunately, many small business owners take a similar approach to running their operations when it comes to their financial records. They don’t realize that accounting data is to their business what a patient’s vital signs are to a doctor. Let’s look at four areas that can help make your business as financially healthy as possible.

Keep to a schedule

Commit to a set time every week to organize your finances and keep all records up to date. It’s easy to get sidetracked when running a small business. If too much time goes by without attention, your books can become one big confusing nightmare. Save yourself the hassle by considering weekly bookkeeping a critical part of your operation.

Separate bank accounts

Financial records can quickly get muddled when you use business money for personal expenses and vice-versa. This is a particular problem for sole proprietors. They earn all the money, so all the money is the same, right? Wrong. To the IRS, all money is not the same, and without clear records of business expenses, you can face a lot of headaches when it comes to completing your tax forms.

By having a separate business banking account, you’ll have a solid record of expenses incurred, the type/category of expenses and a view of overall cash flow. Not only will this make it easier come tax time, it will also provide you with a blueprint to see what’s happening in your company at the dollars-and-cents level.

Pay close attention to payroll

If you have employees, payroll is likely one of your biggest expenditures. It’s very important to make sure that all aspects of payroll accounting such as wages, benefits, overtime and other costs are accurate and up to date. Good payroll accounting practices will help you efficiently track expenses, plus the IRS will appreciate it.

Consider professional help

Owners of small businesses have a lot of theories about what it takes to be successful. Sometimes one of those theories is, “It’s better to do my own taxes and accounting and save a few bucks.” This theory can work, but it can also backfire.

Business taxes are quite different from personal taxes. If you’ve been in the work world for years as an employee, you may have worked through your share of 1040 forms. As a business owner, you’ll be responsible for other forms, such as a Schedule C, which shows self-employment income and expense. If you have employees, another form will be required. Depending on how you do business, you may find that you need a multitude of potentially confusing forms.

Pittsburgh Business Accounting ServicesIn the long run, a good accountant can save money for a small business. He or she knows the most current tax laws and will be experienced in keeping the tax responsibility as low as legally possible. Plus, a professional accountant will save business owners the time and hassle of bookkeeping, payroll, & financial report preparation, all of which require a great deal of attention and planning.

Running a small business requires the wearing of many hats. With your accounting hat firmly in place, you’ll be preparing a smoother road ahead as your business grows and changes.

For timely tax and accounting assistance, the experts at W. Cotton Mather are ready to help. If you’re running a small business in the Pittsburgh area, call us at (412) 931-1617 to discuss your accounting needs.

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4 Accounting Tips for Small Businesses — 16 Comments

  1. Thanks for the great tip about small business accounting, especially about keeping separate bank accounts to keep track of all business expenses. I think one of the hardest parts of running a successful business is learning the bookkeeping, and making sure that everything is being kept up to date. Maybe I should look into hiring an accountant, or even handing it over to a service.

  2. You make a great point about how it can be important to keep your personal and your business accounts separate. This will make your bookkeeping much easier. As you mentioned, having a separate business account paired with professional help can make tax season much easier. This will help you know what can and cannot be deducted from your taxes to help ensure that you stay profitable and avoid audits.

  3. I really like your tip about seeking professional help when it comes to small business accounting. Keeping track of money can be pretty tricky, especially when you are just starting out. Doing everything that you can to make sure that you know what you are doing financially will help you in the long run.

  4. I have been running my business for more than 3 years and my company accounts are not kept proper and are always not updated. It is also expensive to seek professional accountant to help. However, I totally agree with you that a good accountant can save you precious time. It is better to spend more productive on your business and leave the accounting to the professional to sort it out.

  5. All great suggestions! Many times business owners try to do all things and get sidetracked easily. Do what you do best and outsource the accounting. Have clear expectations and goals and partner with a company that has your best interests.

  6. I really like your tip “consider professional help.” I think when it comes to owning a small business, it can be hard to keep track of everything that you have to do. Hiring someone to do the bookkeeping and to keep track of your finances might take a load off of your already heavy workload so you can focus on running your business!

  7. I totally agree that a good accountant can save money for a small business in the long run. Even small errors in a business’ accounting can end up costing you a lot, so having someone whose career is based on staying up to date on procedures and tax laws will ensure that things are done properly. Also, like you mentioned, the business owner will be able to take the time they would have spent worrying about the accounting information and spend it on running their business and increasing sales instead!

  8. I am an accountant with my own practice. I find it difficult to get my own books up to date when there is client work to complete. If you cannot find an accountant to help you out, a good bookkeeper is a must.

  9. I love that you pointed out that it is very important that all payroll information is correct. I think that is one of the main places that any fraudulent activity would take place. I want to find an accountant for my small business, but I’m not sure it’s worth it.

  10. Yes. There are business owners who want to save cost by doing the accounting themselves. More and more are looking to outsource to professional accounting firms to leverage on the knowledge and time. I would encourage business owners to consider hiring professional accountant or explore the options of outsourcing to increase the productivity.

  11. I like that you said that doing your own taxes can be beneficial to your business, but it can also backfire. If someone is running a business then they might want to have some of the work taken off of their back. Professionals are probably pretty good at what they do, so you might want to trust them when they make suggestions.

  12. My favorite spaghetti place in town when bankrupt two weeks ago and I am really sad I was going there ever since we moved here last month! It was informative to learn that business taxes are quite different from personal taxes. I would imagine if they knew that they would have known this tip they would still be in business!

  13. I am terrible at accounting. So, I liked your suggestion about getting some professional help. It does seem like an accountant would be able to help with managing your businesses budget.

  14. Seeking a professional could save you more time and can let you focus on the more important aspects of your business. That is why, if you aren’t sure how to approach your accounting data, consider hiring someone who knows the field well, it can help you in the long run including legal matters as well.

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