Creating a smart accounting system

Since most small business owners are trained in business and other things besides accounting, their books are often one of the areas where they fail. Having a smart accounting system is important if you wish to stay in business for several years to come. Many small business owners make the mistake of intermingling their business finances with their personal finances. Never make this mistake as it can cause a lot of trouble when taxes are due. Always have separate checking accounts and credit cards. Besides making your taxes easier, it will make tracking your business and personal expenses easier.

Hiring an accountant or bookkeeper can get expensive, fortunately there are some other things you can do to implement an accounting system.

Start by making a list of all your accounts payables and receivables. Be sure to list the daily expenses like utilities, wages, etc. As you compile the list, it will help you create a calendar for the different dates payments are due. This will help you avoid missing a payroll date, especially if you enroll in automatic things like direct deposit and automatic bull pay.

A good small business manger must understand the importance of maintaining a positive cash flow. Your cash flow is critical to your small business success as it determines if you have enough money to stay in business on a day-to-day basis. Always work on your books daily.

Most auditors find that the companies they audit do not spend time inputting numbers on a daily basis, causing a few numbers to be off from their quarterly statements to their year-end statements. This will cause an automatic red flag and auditors are sent in to double check the calculations. Use software programs that will help you properly manage your small business accounts and spend a couple minutes at the beginning or end of each day to input the numbers and check to see if they match. If you can't keep up with it, hire a part-time bookkeeper to come in and input numbers for you.

Recognize when you have cash dips and cash influxes. Use this information to your advantage to project future marketing efforts. This information will also show you if some of the marketing strategies you have been using are actually working. Preparing for cash dips by saving some of the excess money during peak times is a great way to keep your business afloat when you don't have a large revenue stream coming in.

Use a software program or electronic bookkeeping method to track your books. Even an Excel file can do the job if you formulate the cells appropriately. It is important to have an electronic method since most auditors will ask for electronic proof of your books during an audit. Having an electronic method is also a great way to double check your math to make sure everything was entered appropriately.

You can purchase basic bookkeeping programs for $19.99; however the nicer programs like QuickBooks will cost you at least $59.99 or more. Paying a little extra to start with may be a wise investment, especially since most bookkeeping programs will do more than double check your math. They are often able to calculate payroll, print out paychecks or stubs, send electronic deposits, track inventory, produce sales reports, and a handful of other things.

If you still are having trouble with your books and you cannot afford to hire someone, look into take a few accounting classes. Most community colleges will offer accounting and bookkeeping courses for a small fee. This is a great way to learn a few things about accounting that can help you develop a solid method to track your books and avoid losing your business.