6 Accounting Tasks Every Small Business Owner Should Stick To
Plenty of small business owners wonder how they should tactically tackle their accounting. They also posit this question to their peers, their advisors, their mentors, Google, the internet at-large, small business forums, Meetup groups … there are probably even a few accounting-themed prayers uttered every now and then. And while every business is going to require a slightly custom approach (because all businesses and business owners are different), there are a few tactics that every entrepreneur can implement to go about their books confidently…
- Invoice as Soon as You Can Invoice
Waiting to send an invoice until long after it’s appropriate to send the invoice is only going to have negative outcomes. Not only are you extending the time it takes to get paid, but you’re also running the risk of actually forgetting to send the invoice. Get in the habit of firing off the invoice as soon as it’s OK to do so. How do you gauge when that is? If you’re a service provider, send it off as soon as your work is complete. Similarly, if you operate more in a consulting role, set your invoice send date and net payment terms in the agreement you sign with your client at the outset of the relationship. It’s then your job to send invoices on time and theirs to pay on time!
- Capture Expenses in the Moment
Raise your hand if you love coming back from a business trip with a wallet or purse full of receipts that you need to organize and enter into your accounting system? Oh? No one loves this? That’s exactly why you should capture an expense when you make the purchase. Whip out your smart phone or tablet and snap a picture of the receipt as soon as you get it. You will thank yourself later.
- Deposit Payments When You Get Them
Ideally, you’re receiving payment on invoices digitally (i.e., online or bank-to-bank transfer) but if you do still take cash, checks, deposit them as soon as you get them. If you’re concerned about excessive trips to the bank, open an account with the bank next door and you can transfer if you don’t mind the transfer cost
- Review Your Cash Flow Weekly
Obsessing every day over your cash flow won’t get you far. Instead, review your cash flow weekly. This will allow for transactions to process. Why bother with reviewing cash flow? Cash flow gives you a real-time look into the money in and the money out of your business. Sounds like that’s worth knowing, yes? There are online invoicing software that provides subscribers weekly cash flow reports to keep them informed of the health of their business
- Stay on Top of Your Tax Obligations
For most small businesses, tax related activities are not just limited to the monthly/annual filing deadlines. Rather, tax tasks rear their pretty little heads regularly throughout the year. For example, if you are a small business owner in Nigeria you need to be aware of monthly tax returns. When you’re aware — and on top — of your business’s tax obligations you’ll find yourself getting a lot less visit/calls from various revenue agencies.
- Measure, Measure, Measure
You can make a lot of movement but not make much progress. Comparing your financials is one of the best ways to gauge whether or not your business is making progress (however you’ve defined that). When a month closes, compare it to the last month. Then compare it to the same time frame last year. You can do the same for the year too. Take notes on what was different. Did a decline in customers drive your revenue down? Did you incur more expenses? Simply put, always measure your business so that you can make adjustments as needed. The primary business financial reports can be a big help when it comes to measuring.
These are some of the most universal, straightforward tasks that, when implemented routinely, can help every small business owner confidently build a great business. Is there an accounting habit you practice that’s worth sharing?