Accounting today has never been easier, thanks to the advancement of technology and software. With a simple click of a button, what would have taken hours to complete now takes mere seconds.
Unfortunately, some accounting issues have also arisen due to the use of “easy-to-use” software.
Many people, especially small business owners, believe that they do not need an expert accountant and can do everything by themselves.
This has led to many errors, small and large, that have resulted in distorted realities, damaged reputations, and more.
If you are a small business owner wanting to get your accounting right from the get-go, here are some tips you need to keep in mind.
1. Ensure your accounts are all accurate
One dire mistake you can make is to assume all your records are accurate.
This may expose you to a problem you may have overlooked, ready to bite back.
To ensure that all your accounts are accurate, always remember to reconcile your books with the bank.
This ensures that everything matches and that your records reflect the real balance.
2. Separate contractors from employees
If you are working with employees, you must know whether they are your employees or those of others.
There is a big difference between employees and contractors, and you need to be mindful of this difference during bookkeeping and accounting.
Failure to do so can lead to inaccurate documents that could require an audit, something no business ever wants to go through.
3. Hire a pro to help with accounting
You may think that doing all your accounting and bookkeeping in-house might save you a lot of money, but the opposite is true.
When you do these activities by yourself with no know-how, you end up losing money here and there, which can rack up to a significant amount.
Plus, it is a lot of effort to do accounting on your own.
If you are unsure of how to go about accounting or bookkeeping, the best way to avoid mistakes is to work with an accounting firm.
They have all the experience and knowledge needed to ensure all of your financial records are accurate and up to date.
4. Record profits after delivery
It is tempting to record a promised sale or agreement as profits right away.
After all, that $100,000 deal may be what you need to get you out of the red.
Unfortunately, this can lead to a big problem. If you have recorded it as a $100,000 profit, what happens if you run into a problem and end up spending $20,000 to fund the project?
This can cause your records to display false information about your business. As a result, you may end up making a decision that may cost your business more than it can afford and seriously hurt its financial health.
With that in mind, always be sure to record income after everything is done and dusted.
By putting effort into getting your bookkeeping and accounting activities done the right way, you get to picture your business’s real status.
This is exceptionally beneficial when making financial decisions in the future when the decisions you make should be based on real figures.
This ensures that your business maintains a good financial standing and that it stays that way.
That said, the best tip we can give you is to work with a professional accounting firm. As mentioned already in the article, they have the know-how to record all your data correctly.
This ensures you stay far away from any financial trouble and that you can make sound financial decisions.
Pattar & Co CPA offers tax and accounting services to Indianapolis businesses to ensure their tax and accounting needs are fully satisfied.
If you are looking for professional help for your business’s accounting, reach out to us for a consultation!