Top 9 Bookkeeping and Accounting Tips for Small Business Owners

Cody Cromwell
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Why Bookkeeping Is Important

Running a business, especially when you’re just starting out, often leads to mounting cash flow problems. Some of them are operational or even just minor, while others are more serious and can cause long-lasting damage to your business.

Since running your business is your livelihood and your primary source of income, you need to know where your money is going. Your business accounting records are your sheets of paper that need to be filled out on a daily, weekly, monthly, and sometimes even yearly basis. Without them, your business won’t know where it’s heading.

We’ve talked to small business owners who are in the middle of all accounting problems. Find out which small business accounting tips will help you out.

Good Bookkeeping Starts With How the Business is Operated

At the top of the pyramid, the business owner is ultimately responsible for the business’s finances, but this idea is backed by the fact that the ownership is entirely in the hands of the business owner either alone or in conjunction with other people. Owner model, the remaining people in the entity are exclusively shareholders and protectors.

In other words, the business owner is the primary administrator in charge of the entity’s financial record keeping. Thus, the business owner maintains and manages the business’s accounting and accounting tasks.

In addition, the business owner is responsible for tax filings and performance related transactions, as well as keeping transactions and financial records in accordance with the laws and regulations. The business owner is also the person who is the responsible for informing the relevant parties, e.g., employees, supervisors, investors about the current business financial conditions.

In this case, the business owner is primarily responsible for what the business is worth and how much money the entity is worth. Since governments and other organizations will require the entity’s owner to file accurate financial records to meet the requirements, the business owner needs to be skilled and have basic financial knowledge in order to be effective.

Top 9 Bookkeeping and Accounting Tips

If you’re the owner of a small business, or if you’re planning to start one, you’re in an interesting situation. You need to make sure you do everything you can to propel your business forward, but on the other hand, you don’t really have a lot of extra resources or even time to invest in this major enterprise. Aside from finding the capital for your business, the other major issue small business owners find themselves having to deal with is the accounting/bookkeeping part of their business.

While you might have enjoyed accounting/bookkeeping as a student and simple calculator or pen and paper is enough help you keep track of your balance as a freelancer, generally speaking, the accounting/bookkeeping part of any business is more complex than it appears on the surface. This is especially true if you’re starting a business where money is involved. This is because you have a great deal of other responsibilities to deal with, and paying attention to your business and finances doesn’t necessarily require as much time as you might think!

Keep Business and Personal Finances Separate

This may seem obvious, but business and personal finance have a tendency to become intertwined. This is why it’s so important to keep business and personal finances separate.

Many business owners keep personal bank accounts in addition to business accounts, and this is a mistake. Not only is this bad for the small business owner, but it also puts the business’s finances at risk. It’s much better to keep your business finances separate from your personal finances, and to use business funds only for business expenditure.

Furthermore, it’s important to set a good budget and stick to it. There are credit cards, auto loans, and other personal loans that have generous terms for small businesses borrowers. And if you get into financial trouble, these loans can take priority over your business loan, making it much more difficult to pay off your business loans as well.

So, if you can, consider getting a separate business bank account and set your business money on deposit into that account. You can also consider getting personal loans for your business. With good business credit and the repayment of these loans being lower than your business loan, you’ll be better off financially.

Pay Yourself a Salary

Reimburse Yourself for Business Expenses

If you take the time to write down all of your business expenses, you’re not going to think twice about writing a check, and you’ll know that you did everything you could to keep costs down.

However, if you simply go on a spending spree, chances are you’re not going to do that much, if anything at all, to keep your expenses down.

When you use your business for personal expenses, you’re not really re-appropriating your money to your business; you’re just getting yourself a nice little vacation.

But when you reimburse yourself for business expenses, that money truly does come back to you, ensuring that you can cut costs down the road.

Separate Your Personal and Business Expenses

It’s easy to cross the line between personal and business expenses, but trust us, once you start separating your business expenses from your personal expenses, you’ll see a massive decrease in your overall taxes.

So don’t get lazy. Whether you’re using your phone line for your business or paying for your internet (we recommend using a toll-free number for your business), make sure you separate your business expenses from your personal ones on your receipts.

Track and Reimburse Business Mileage

According to Many researches have shown that almost 74% of independent businesses do not track their business mileage for tax purposes.

What if you lose the tracked mileage?

You can only recoup the amount you can either convince your tax preparer to do a secondary adjustment or you go to IRS directly, but this doesn’t remove the record of the untracked mileage.

Keeping track of your mileage on you own is difficult. If you know if you run 1250 miles last month, how you confirm if you drive your truck to offices?

You can use some of the tools below to track your business mileage.

Garmin Carpet Mate GPS

Garmin Carpet Mate 2 GPS is probably the best tools that you can use to help you track your vehicle miles. Even though it is an expensive option, it will help you.

The Garmin has huge display and you can keep track of a lot of information. If you love to drive a lot and use your vehicle during the week, this is probably the best option available for you. It can track your location, odometer, speed, distance and drive time. The best part is you can also track the mileage on Apple, Android and Windows mobile apps in addition to the built-in PC software. So you can track you business mileage and don’t have to worry about paying extra tax.

Keep Your Receipts

This should be the first rule for any young entrepreneur. Without cash, how can you stay in business? You’d be amazed at how many startups literally run out of money.

Many small business owners can’t say if they’ve kept all of their expense receipts, let alone kept them forever.

However, you should.

For US businesses, you’ll definitely need to keep your receipts for as long as tax reporting is concerned – and possibly indefinitely.

Outsource Payroll

Services To Save Time, Stress & Money.

Outsourcing payroll services gives you the freedom to focus on your business and watch your bottom line.

This method of reducing your costs can not only help you stay in business, but it can help you grow your business and take your business to success.

It can be a little confusing when it comes to choosing outsource payroll services. Some companies offer discounts if you take a family or 401k plan and there are a wide variety of outsource payroll services to choose from. But other than the price, there are many things that you should look out for when choosing what will fit you best.

Here are the top 9 bookkeeping and accounting tips for small business owners:

Your company is only as good as your marketing …………………………………….

If your company isn’t good at marketing, no one will know about you or your business. But if you are good at marketing, people will find your company with minimal effort on your part. It is important to have an image of you and your business that will help you grow your business and succeed.

Don’t just rely on your past clients or past customers. One of the best ways to grow this image is to generate new leads and new business.

Outsource payroll services help you secure your business ………………………………………..

Hire a Pro to Set Up Your Accounting Software

Setting up an accounting business is no easy task. It’s the most important thing you will do to get your business off the ground. Trust me … There is no manual on how to setup accounting software correctly, so it’s important for you to pay for professional help getting your business up and running.

If you don't have the time or patience to do the work yourself, one of the best options I can suggest is to hire a bookkeeper to guide you in setting up and creating your accounting system.

You need to understand the importance of hiring a bookkeeper from the start. When you hire a bookkeeper, you will have someone who will help you create a bookkeeping system that's works for you and keep you on a successful path.

I know that your independent nature may want to scratch your own head about creating your own accounting system, but believe me … it's not that simple and hiring a pro is worth it for its benefits.

Set Up an Accounting System the Right Way

When you have a problem, you want to know the answer and not hear a big –I don’t know.”

Assign Bookkeeping Tasks

Bookkeeping … Not really the most exciting part. You’ll spend many an hour putting away receipts, recording expenses, and reconciling your expenses to your income reports. You’ll work hard, but hopefully you’ll be reaping the rewards for long after. Being a good small business owner isn’t just about generating revenue, it’s also about accounting for your business. You’ll need to be aware of your income and expenses and effectively record these tasks with the help of your employees.

So how do you make bookkeeping go as smoothly as possible for your business? According to your business owners and accountants at Quarter Tax Online, there are really 3 things you need to do to get the most of your accounting tasks and processes:

Work out where your money is comming from.

Make a list of all your income and all your expenses. This will allow you to make budget plans and will then give you a clear idea of what your money is being used for.

Set up an accounting system.

Analyze Your Accounting Reports

The first tip for small business owners explains why it’s important for your business to do the right thing in order to pay the lowest amount of tax possible.

The first thing you should do is to analyze your accounting reports, look for any areas where you can reduce your tax liability. And make sure you don’t just make up any transactions that are unattainable for you, the accountant may not accept it as real for tax purposes.

To provide you with information that will help you prepare for your tax audit, you’ll want to read a few important books relating to small business accounting and taxes.

The Bookkeeping and Accounting Bible: The Expert Guide for Fortifying Your Financial Records

Bottom Line

Ever wondered what the top…er count per page is for the most popular business accounting softwares? Or perhaps you’re seeking more knowledge on the difference between fixed-income income and equity? All this and much more can be found in the list below. Before we get started, I suggest you bookmark this list, print it out, and keep it on hand for quick reference.

Best of luck with your bookkeeping and accounting endeavors!

{1}. Many corporations use 1-3 digit accounting codes. You should too.
{2}. Investigate the companies you work with. Try to find out if they have income taxes prepared by an IRS independent auditor.
{3}. Make sure your invoices are all organized in a logical sequence based on the purchase date in your accounting system.
{4}. Make your accounting records as simple, coherent and as close to definitive as possible.
{5}. Time line the mission statement with the financial statement.
{6}. Avoiding duplicate purchase orders (POs) and invoices can save you time and money.
{7}. Due to the IM&R Department audit of your First Quarter financial statement, you need to leave out the Internal Auditors meeting notes from the income statement.
{8}. Don’t list your tax expense as a % of revenue.