Monday, June 13, 2016

Small Business Accounting Struggles

Nobody ever said that running a small business is easy. Not only do you have to ensure that you’re earning a profit and deal with troublesome clients, but you also have to handle all of your business accounting matters. And, unless you’re an accounting expert or you’ve got one on staff- which, by the way, you should really think about doing- chances are that managing money isn’t exactly your forte.    


Fortunately, though, some accounting struggles are more common than others, and, because they’re so common, there are some easy, proven, virtually foolproof ways to remedy them.

Remembering Who Owes What
When you imagined running your business, you probably imagined sending invoices, having people pay them, and then rolling in dough. Unfortunately, as you probably now know all too well, it’s rarely that simple. There are people who don’t pay, people who pay late, or people who don’t pay in full. Thus, if you’re not keeping careful track of who has paid (or hasn’t paid) what, you’ll end up very confused and unsure of who owes you money and how much, which could lead to lost or forgotten funds, the last thing any business needs!

Having and relying on a simple Accounts Receivables ledger can really help with this. Use this ledger to separate customers by name and account number (if applicable), and to keep track of who has been invoiced, any payments made, and any balance owed. You can do this with nothing more than a basic spreadsheet, but it will really make all the difference in keeping track of everyone’s accounts and of what you’re owed.

Keeping Track of Receipts
Another thing you’ll need to keep careful track of is receipts. The IRS requires you to keep many receipts, sometimes for up to two years or more depending on circumstances. Make sure you are aware of what receipts the IRS may request from you and that you are properly storing them and classifying them.

You can do this the old fashioned way by keeping receipts in a filing cabinet that you’ve segregated by date and/or category , or you can simply scan receipts and file them away online if you want to avoid clutter. Either way, developing a simple system for easily accessing the receipts you need is definitely the way to go.

Making Revenues and Expenses Match
Finally, know that there is a major difference between just recording financial data and actually being able to understand it!

When you mark down an expense, for example, indicate clearly what the expense was for and what, if any, revenue that expense was related to. This will help you to understand what spending is truly necessary and what spending needs to or should be cut down on.

Having clear, written policies about how different revenues and expenses relate can make this information even easier to understand and more comprehensive for you and others whom you employee.


If you can follow these simple tips, you’ll be able to easily overcome a lot of common accounting woes.

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