Introduction

Accounting can be stressful for many small business owners. The personal nature of owning a small business means that you’re often wearing many hats at once while also catering to your customer’s needs on a very individual basis. Unfortunately, that can make your accounting tasks difficult to keep up with. This makes balancing accounts and tax season incredibly stressful. We’re here to help you out! In this article, you’ll learn some of the essential ways small business owners can stay on top of their accounting without jeopardizing those important relationships that you’ve worked so hard to grow.

Separate Accounts

As a small business owner, it’s always important to keep your personal and business expenses separate. While it can make life easier at times to have one account for everything, it’s going to make your accounting, taxes, and reports very difficult to create. (As an added bonus, it helps with personal financing and budgeting too)

“When you’re a small business, the need for a separate business account can sneak up on you,” says Patricio Paucar, Co-founder and Chief Customer Officer at Navi. “Plus, nobody likes going to the bank. Setting up a business account sounds scary, but it is so worth it. Even if you don’t think your business is big enough to need its own account, you’ll likely get there eventually so it’s better to have that account ready to go now than to scramble to change accounts when business is booming and you have so many other things to manage.”

Accounting Software

Accounting softwares and tools aren’t a new idea, but there are so many options that it can feel overwhelming. Many small business owners love interacting with their customers or creating their products so the idea of spending a few afternoons learning a new accounting software sounds like a drag. However, once you’ve mastered your software, you’ll likely have even more time to spend doing the things that you love!

“There are some amazing programs out there in terms of small business accounting software,” says Dr. Michael Green, Chief Medical Officer at Winona. “Some will even connect with your POS systems or online ordering platform to automatically log things like sales, inventory, and tax information. Gone are the days of manually balancing the registers and credit card payments – these systems really are like hiring your own accountant and finance manager for a fraction of the cost.”

Stay Organized

If you’re a small business, you’ve probably already discovered the need for organization systems. Whether that means you have color-coded bins for products, a fancy filing system for orders, or beautifully labeled storage containers for supplies, each small business owner becomes somewhat of an organization guru in their own ways. There’s always some sort of method to the madness that may confuse an outsider. This idea should apply to your accounting as well. 

“Creating a system for your accounting and sticking to it can help your accounting situation significantly,” says Ryan Azimi, Director of International Development at ETIAS. “Remember, if it doesn’t work for you, it’s probably not going to help you succeed. Learn the difference between ‘adjusting to a new process’ and ‘causing problems. If you still don’t like something about your new method after a couple of months, reevaluate what the issues are and what changes are possible.”

Stay on Top of Tax Info

Nobody likes thinking about the upcoming tax season, but tax information should be kept current and organized. In fact, if you’re looking for a starting point to practice organizational skills, this is a great place to begin! Tax info should be kept in one place – whether that’s in a physical folder or portfolio or in a specific file on your computer. 

“Maintaining your tax documents in an organized method throughout the year can play a major role in your accounting,” says Natália Sadowski, Director of Aesthetics at Nourishing Biologicals. “Don’t ever get rid of tax information from previous years either. It’s always helpful to be able to look back and compare numbers to project annual sales, expected peaks, and when your slower months might take place. It can also help you budget for future projects or events that you might participate in.”

Manage Inventory Well

Inventory can be a very hard thing to keep track of. However, to have accurate accounting numbers, you’ll need to know what your inventory is at all times. Many of the accounting software programs out there have options for you to use to keep track of inventory in the same place as everything else.

“While you may be a company that sells items made in-house, it’s just as important to know a supply inventory,” says Michael Fischer, Founder of Elite HRT. “Inventory doesn’t only include completed products sitting in your storage or warehouse. It includes ingredients, materials, packaging, and more.”

Learn to Create Projections

Again, using that accounting software (if you haven’t figured it out yet – that’s a pretty big part of staying on top of accounting) you can learn to create projections. Between previous tax information and current numbers, you should be able to forecast what your different sales seasons look like.

“Being a small business means that you’ll have some massive peaks and valleys in your income stream,” says Sam Sarullo, CMO of Daniel’s Jewelers. “It’s not like a salaried position where you can anticipate a steady income throughout the year. This is why it’s important to have separate accounts and accounting software. You can budget and project spending a lot more accurately with these tools.” 

Conclusion

Running a small business is a very difficult thing. The word “small” in the title makes it sound like it would be a walk in the park but, in reality, it means that you’re often doing the job of the CEO, marketing director, sales associate, accountant, and public relations team, or any combination thereof. Utilizing the appropriate tools like accounting software and keeping these tips in mind can help you minimize your stress while helping you stay on top of accounting. Staying organized with separate accounts and organization systems and learning to manage inventory and make projections can also make a big difference in your ability to stay on top of your accounting.