Accounting can be overwhelming for anyone, and that’s especially true when you’re dealing with a small business or startup which may have unique financial needs, like renting desks in an all-in-one coworking space, and fewer accounting resources than larger businesses. Bookkeeping and taxes are significant costs for small businesses, but there are some simple strategies you can use to set your company up for success.
Create a Company Bank Account
Most jurisdictions require that business-related income and expenses can be easily separated from personal purchases and other transactions. Many banks have accounts that cater to small businesses, and some will provide introductory offers for further savings.
Remember that you don’t have to create a business account at the same bank as your personal checking and savings. Feel free to shop around for the offer an account that fits best with your company’s financial goals.
Carefully Track Expenses
It’s common for employees to use their personal funds for a variety of business expenses, whether it’s lunch with a client, travel costs, or gas in the company car. All of these expenses should be quickly and meticulously logged in order to keep track of tax-deductible costs as well as compensation from the business.
There are a variety of programs available to help you manage your personal and business expenses, and many are designed specifically for small businesses. These applications will automate and streamline many aspects of accounting that would otherwise be time-consuming and difficult to manage.
Structure Your Company to Minimize Taxes
Depending on your location and the size and type of your business, you may be able to structure your company in a number of ways. Different types of businesses are responsible for different taxes and other expenses, so the wrong decision could lead to unnecessary costs.
If you’re unsure of the pros and cons associated with each type of business, consider seeking help from a professional accountant. They will be able to walk you through the available options and make the decision that’s best for your company’s short- and long-term goals.
Send Invoices and Follow-up Quickly
While cash flow can work differently on a large scale, small businesses need to stay on top of all incoming payments. It’s important to send invoices promptly after work is completed in order to receive payment on time and be able to pay your own employees.
Getting too far behind on invoices can make it difficult to pay for all business-related expenses, so don’t be afraid to follow-up if a customer doesn’t pay on time. Many companies set up automatic follow-up emails after a certain grace period, and you have the option to pursue legal action if a customer refuses to pay or is consistently late.
Efficient accounting is vital to the life and growth of a startup or small business, and it’s important to do everything possible to save money and reduce costs. These tips will help you effectively manage your cash flow and ensure that you’re doing everything you can to help your company grow.
Rae is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to NYC to pursue her career and continue curating quality content. Rae is passionate about travel, food, and writing, of course. Fueled Collective
Twitter handle: @araesininthesun