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.