LUTZ BUSINESS INSIGHTS
NEW TO ACCOUNTING? 7 PRACTICES YOU SHOULD ADOPT
JIMMY BURGESS, SENIOR ACCOUNTANT
Your first venture into accounting may seem a bit daunting. Here are some guidelines that should help you manage your finances.
If you’re just getting started managing your company’s finances, there’s a lot to learn. You can do the work required on paper – or by using Microsoft Word and Excel for invoices, customer lists, time-tracking, etc. Software like QuickBooks can help tremendously. For example, by eliminating duplicate data entry, automating processes, and creating reports.
Either method can work for you. Regardless of which approach you choose, though, there are some basic rules that most small businesses should implement. Here are seven of them.
#1 – Track business and personal income and expenses separately.
Mixing them can complicate tasks like tax preparation and reporting. It also makes it difficult-to-impossible to identify and troubleshoot problems. Open separate bank and credit card accounts for your business finances.
#2 – Keep up with your quarterly estimated taxes.
Since your business and personal expenses are separate, you’ll be able to estimate what you owe the IRS four times a year and submit it. Failing to do so may result in a big tax bill at year’s end – and possible penalties.
#3 – Know the status of your outstanding invoices.
Give your customers firm due dates, and follow up when those deadlines have passed. Track them on paper calendars if you’re doing your accounting manually and set up a reminder system. Make it easier for customers to pay you by accepting credit cards and electronic checks, and consider sending statements. Accounting software makes all this easier and faster.
#4 – Categorize transactions carefully.
If you’ll be filing business taxes for the first time in 2017, you’ll learn how important it is to be able to account for all your deductible expenses and assign them to categories like advertising, office expenses, and travel. This is another area where accounting software can save time and improve accuracy.
#5 – Reconcile your checking account and examine credit card statements carefully.
Yes, it’s a pain. But you must be certain your bank balances are correct. You work hard for your money. Always know how much you have, and protect it. Also, you don’t want to miss recording any deductions.
#6 – Back up your books.
This is easy if you’re using accounting software. If you’re not, find a way to keep important information like your customer list and the status of your sales and purchases in an off-site space. This practice can mean the difference between picking up where you left off after a loss of data and having to close your doors. Your accounting records would be impossible to completely reconstruct.
#7 – Perform periodic checkups.
Do this at least weekly, monthly, and quarterly. Get an overview of bottom-line numbers like your current profit or loss, your income tax obligation, and your aging receivables and payables.
It’s difficult to go it alone when you’re approaching accounting for the first time. Besides, every minute you spend tracking your finances is a minute not spent managing your business and helping it grow. We can free up some of that critical time by taking on as much of your financial management as you’d like. Contact us to find out how we’ve done the same for countless other small businesses.
ABOUT THE AUTHOR
JIMMY BURGESS + SENIOR ACCOUNTANT
Jimmy Burgess is a Senior Accountant at Lutz with over four years of relevant experience. His primary focus is to provide outsourced accounting to clients with a focus on QuickBooks, tax and payroll compliance, small business consulting, as well as software implementation training.
AREAS OF FOCUS
- Outsourced Accounting Services
- Tax & Payroll Compliance
- Small Business Consulting
- Software Implementation & Training
- Construction Industry
AFFILIATIONS AND CREDENTIALS
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BS in Business Administration and Accounting, University of Wyoming, Laramie, WY
- Youth Sports Coach, Volunteer
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