Friday, July 14, 2017

5 Simple Accounting Hacks for Small Business Owners

If you are starting a small business, or you are searching for ways to improve the way yours is currently being run, you may want to make some changes to your accounting practices. 

You would be surprised at how much of an impact poor accounting can have on a business, or how much time it can waste to get the different calculations squared away. Here are five simple accounting hacks that should help any small business owner.

1. Have Two Bank Accounts

One of the biggest mistakes that many entrepreneurs and small business owners make is when they decide to use their personal account for business purposes. Not only do the lines of spending become blurred, but it is much harder to keep detailed records when you are using one account for two different purposes. 

In those cases, you could hire expert Brighton & Hove accountants to sort out the accounts and how you would have to file your business taxes.

2. Keep Accurate and Detailed Records

You may wonder how some small businesses seem to struggle a lot more come tax season. The reason is because they have not kept accurate or detailed records. When you are running a business, every single transaction should be logged. 

Whether you are keeping paper records, or you are entering everything into a computer file, you must be detailed and accurate with this work. The more records you have, the easier it will be for you to fill out your tax forms accurately.

3. Determine Your Tax Exemptions and Learn the Deadlines

One of the perks of running a small business is the tax incentives and exemptions that you may qualify for. But if you are not aware of these specifics, you may end up filling your forms out incorrectly. 

And while the IRS does take a lenient tone with those who mistakenly file their taxes incorrectly, it is still not a good idea to anger the tax man. Similarly, you will want to keep a handle on all the relevant tax deadlines throughout the year. 

The more you are aware of these deadlines, the easier you will find it to get everything filled out and squared away.

4. Schedule Profit and Loss Statements

The best way to know how your business is performing is through a profit and loss statement. However, you do not want to have these statements created in a haphazard way. 

Figure out a period that will work for you – whether it is weekly, bi-weekly, monthly, quarterly or annually – and stick to it. You can always have statements created for different periods. 

For instance, setting up monthly, quarterly and annual statements is a good idea. That way you can compare your progress from one month to another, but also to previous quarters and years.

5. Calculate Margins

What is your margin? It is the revenue subtracted from business expenses, which is divided by revenue. This percentage tells you what margin you are making on a product, activity or service. Understanding your margin is key if you want your business to succeed.

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