Business owners know that one of the most important components of their company’s success is proper accounting. A lot of people, however, do not want to have anything to do with it because it can be quite complicated. Of course, you’ll have to have formal training and education in accounting to be able to perform the job well. But if you study and persevere, you can work hand-in-hand with your accountant in making sure that your company’s records are complete and accurate.
To help you start out, here are three accounting tips that you can apply or practice.
- Do not combine personal and business expenses.
Most small businesses often have a limited number of employees. So what usually happens is that there is a tendency for you to mix your personal with business expenses. This can present problems, not only for you but for the company as well. If you have an accountant, he/she should be the one holding records of all business expenses. Your personal expenses, on the other hand, should be kept in a separate bank account. This may seem like a simple thing to do, but as you go on with your business dealings, you’ll find this tip extremely helpful.
- Regularly track your records and make sure they are always accurate.
All companies have daily accounting activities, which mean there are new records every day. Your accountant should be on top of the situation by keeping track of these. Even if your business uses an online banking system, your accountant still needs to keep a hard copy of all the company’s financial records. And it should all be kept in one place, like in a folder or envelope in a filing cabinet or drawer. Likewise, your company should use an accounting program so that your accountant can update records through the online banking system, the accounting program, and the files inside the cabinet.
Aside from keeping track of daily accounting records, it is also important to check each transaction for accuracy. If these records are not accurate, even if they are regularly updated, they won’t do your business any good.
- Never forget any receipt.
Nowadays, stores and restaurants have computerized receipts, so this is what you will normally get when you purchase something. While this is all right, it is still recommended that you ask for a written receipt as its ink does not easily fade. If you do have computerized receipts (which uses thermal paper), you can have them photocopied to make sure you still have a copy of them when the ink starts to fade. This is important because you have to file all the receipts and keep them in one place. Additionally, you or rather, your accountant; should have an accurate count of all receipts. So do not throw away your receipts no matter how small the amount spent was. You’ll need the receipts for categorizing expenses, as well as for tax-related reasons.