The financial health of your business is critical to your long-term growth. Without proper accounting practices in place, your company’s stability could be at risk and you could face serious consequences.
But even if you don’t have a background in finance, getting your small business finances in order doesn’t have to be complicated. With the right tools and resources, you can set up a strong financial foundation for your company.
Here are three tips for how to keep track of your small business accounting.
Set up a business bank account and keep personal expenses separate
When starting your own business, you can expect to spend your own money, but establishing separate accounts for personal and business expenses will simplify your finances going forward.
Without a dedicated business account, you’ll get stuck sorting through all of your personal bank and credit card statements to identify which purchases were business-related. Save yourself the headache by keeping the two separate.
Invest in accounting software early
It might sound like a large or complicated purchase to make, but good accounting software is actually quite easy to buy and set up for a small business. There are many options that can be purchased online and are geared toward business owners without professional financial experience.
These platforms are typically cloud-based, so you can use them on multiple devices and from anywhere. They’ll allow you to issue invoices, keep track of expenses, and collect payments. It’s also common for them to offer dashboards and reports so you can monitor the financial health of your business easily.
Take a look at some of the most popular tools, such as QuickBooks, Xero, and FreshBooks. By installing one of these programs, you’ll instantly get a better handle on your company finances and be empowered to make more confident business decisions.
Hire a bookkeeper
As your business grows, there will come a time when you simply don’t have the bandwidth to manage the financials on your own. At that point, you’ll want to look into hiring a bookkeeper.
Bookkeepers will take charge of your accounting software and make sure all ingoing and outgoing payments are being made accordingly. They’ll also prepare important financial statements to make sure you’ll be properly prepared come tax time.
When it comes to hiring a bookkeeper, you have a couple of different options. You likely won’t need a full-time resource at this stage of your business, but you can hire a part-time employee to come in for a few hours each week (or every other week).
Alternatively, you can work with an outsourced or freelance bookkeeping service. Outsourced bookkeeping is becoming increasingly popular with small business owners. Because these professionals work remotely, you can save money on equipment purchases and office space.
As your company grows, you’ll need to continue investing in financial resources. During tax time, you’ll want to hire an accountant to prepare your taxes. From a long-term perspective, you’ll eventually want to work with a CFO to make strategic financial decisions. If you prefer the flexibility of remote/freelance teams, both of these positions can be outsourced as well.