There’s a lot that goes in to running a small business. When you first start out, you’re often everything to everyone: sales, HR, marketing, R&D, IT support, procurement… the list goes on—and it also includes accounting. And while various business responsibilities may require more involvement, planning or variance, accounting can actually be pretty straightforward. Here’s how…
Keep Business and Personal Separate
Tax prep pros and accountants can recall countless horror stories of small business owners who commingle. What’s commingling, you ask? It’s paying for a business expense with a personal credit card and never reimbursing yourself. It’s using petty cash from your business to pay for a night out with your spouse. Most examples of commingling business and personal funds are obviously inappropriate but some can be less black-and-white. Ultimately, you’ll want to keep things separate for tax purposes. Yes, that’s easier said than done in-the-moment, but the better habits your form from the start of your business, the better you’ll be at it.
If you’re really having trouble with commingling, try this: consider yourself two people. There’s business you and there’s personal you. Not only with this help you put up a wall between your business and personal finances, but you’ll also get more disciplined about reimbursing yourself when you do use personal funds to cover business expenses.
Set a Weekly “Accounting Time”
Some small business owners are very disciplined about carving up their week by task. They do email for an hour every morning. They do new business research on Friday afternoons. They do inventory management at the beginning and end of each week. They update their website on Wednesdays. Well, guess what? Accounting requires the same love. To most, that sounds awful and looming, but if you’re disciplined about spending 30 minutes a week on your books, your future self will thank you. Think of it like this: Is it going to be easier to reconcile a week’s work of transactions or a month’s worth?
If accounting is something you really don’t look forward to, taking small lumps on a weekly basis is going to be far less painful than getting beat up pretty soundly at the end of every month or quarter.
This the whole reason you’re in the game, right? (OK, maybe not the whole reason.) The point is, getting paid is what fuels your business. Positive inbound cash flow let’s you do what you want to do: hire new employees, take on new business, expand, add a location, start selling online… the list is endless. But figuring out how to get paid can actually be somewhat foreign to folks starting their on thing for the first time. That’s why it all comes down to creating and sending a great invoice. (Luckily, Kashoo makes invoicing delightfully simple.) Sending an accurate, professional invoice is the first step in getting paid for your product or service.
Pro invoicing tip: remember to send invoices exactly when you’re supposed to! Don’t wait until you think the customer or client is ready because frankly, no custom or client is every “ready” for an invoice. The faster you get your invoices out the door, the faster you’ll be able to follow up on them (because you almost certainly will have to) and the faster you’ll get paid.
So if you stick to these three habits and use your easy accounting software, glory will find you. Or you’ll find it. You know what we mean.