Keeping your business’s finances in check can be time-consuming and confusing. But whether you choose to hire an accountant or your business is too small to hire someone for this position, there are easy ways to keep track of your income and expenses. Whether you’re self-employed and working as an independent contractor or you manage a small to mid-size company, check out the tips below for keeping your business finances in the best shape.
Manage Your Finances at Least Once a Week
To really keep all of your accounts in order, from your accounts receivable to your accounts payable, you need to dedicate just a few minutes every week to ensuring that your bookkeeping is up-to-date. This will also ensure that you know exactly how much money is in your business’s bank account at all times, thereby preventing overdrawing on your account and incurring fees. A good rule to follow is to set about 15 minutes once a week to keeping your accounts organised. Prioritise your finances at this time, and really look at where the money is coming in from and where it’s going so that you can make sound decisions to make your money grow.
Set Up a Reliable Bookkeeping System
In order to track everything properly, you need to have a reliable and easy to use bookkeeping system in place. This could be as simple as a DIY approach that involves the use of a spreadsheet in Microsoft Excel. Or you can opt to use accounting software, such as Wave or Quickbooks. If you would rather not deal with the bookkeeping tasks at your business, hire a professional who can work for you part-time for a few hours each week. You can also outsource this task to a cloud-based employee working from remote.
Bear in mind, too, that you can always change the way you manage your business’s finances as your company grows. So while a DIY approach may work early on, you may need to upgrade to a part-time accountant or bookkeeper eventually once your company grows.
Keep Your Business and Personal Accounts Separate
Avoid mixing your business and personal accounts, especially if you are a sole proprietor. To keep things organised and to claim the right business expenses, it’s best to track your accounts separately.
Make Tax Season Easier
When it comes to preparing financial statements for tax season, it’s highly recommended that you work with tax professionals, such as chartered accountants Toronto, as they’ll be able to steer you in the right direction while avoiding any issues that could arise as a result of misreporting your earnings and expenses.
Once you’ve set up a system that will allow you to keep a close eye on your company’s finances, you should find that it becomes easier to manage your business because you’ll know how much money you really have at all times, as well as how much money you’re expecting to get from customers. This means that you’ll make the soundest decisions without putting your finances at risk.