Business owners often equate bookkeeping and accounting to housekeeping—administration rather than strategy. But accounting is strategic. Accounting tips can make the different between success and failure. Here’s an infographic (below) with eight strategic accounting tips.
Strategic Accounting Tips
1—Let Someone Else Do the Books
Business owners find it hard to let go of certain aspects of their businesses. Finances top the list.
But that’s precisely what most of you need to do, for the financial health of your company.
While you may want to have your hands on every piece of the puzzle, you may spread yourself too thin. At some point, your company will grow enough that you have to delegate certain aspects of it.
2—Trust the Books to a Professional
In many companies, accounting duties fall to whoever is on-hand and reasonably good with numbers.
But that’s a mistake. While you may save money in accountant fees in the short term, your business could lose much more as a result of audits and penalties in the long term.
It’s not the math—accounting software takes care of much of the numbers. It’s the knowledge of accounting principles and laws behind the numbers.
Accounting software won’t correct:
- Incorrect accounting methods
- Misinterpretation of asset values
- Incorrect estimation of expenses
3—Establish an Accounting System
An accounting system isn’t stacks of papers, an Excel spreadsheet or a piece of accounting software.
A proper accounting system is a comprehensive scheme with documented procedures established by an accounting professional. And it operates year-round.
Lost in the Cracks:
-Employees don’t keep receipts
-Receipts get lost before they go into the “shoebox”
-Receipts get lost somewhere between the shoebox and tax time
4—Do Taxes As You Go
You may not want to think about taxes all year long, but your business is better off if you do.
Do you really want to sift through a year of receipts to try to compile an accurate return? Or pay a CPA to do it?
With a proper accounting system, you can record expenses in real time, which:
-Makes tax time easier
-Provides you with financial data throughout the year
-Enables you to make better business decisions—based on real-time financial data—as you go
Waiting until year-end:
-Compiling and recording expenses is time-consuming
-Expense record-keeping is inaccurate
-Tax time is unnecessarily stressful
-Doing taxes is exceedingly expensive (i.e., paying a CPA to compile and record expenses)
5—Keep Small Receipts
You may be tempted to throw away receipts under $75, but don’t. Instead, get into the habit of keeping them, in one place.
You can use these receipts to more easily figure out deductions. Meanwhile, they provide documentation in case of an audit.
6—Track Reimbursable Expenses
As a business owner, you may forget to log expenses for which you use your own money.
But those aren’t personal expenses, they’re business expenses. And your company should reimburse you for them.
7—Regularly Reconcile Books Against Bank Statements
Check your books against your bank statements at least once a month. That way small mistakes won’t turn into big ones.
8—Communicate Well with Your Accountant
Make sure the various departments in your company are communicating with your accountants. Report every financial transaction your company makes, no matter the size.