Organizing Business Expenses
As a small business, you have plenty of things to worry about when you open your doors to customers and clients. One of the major issues comes up when it is time to collect the revenues and pay the bills: How do you organize your income and expenses? Just as with the management of your personal finances, no one approach fits each business because every company is different. However, there are some general practices that you should maintain to keep you on the right track.
Separate Personal and Business Funds
If your business is bringing in decent income, it is usually a good idea to keep your personal funds separate from your business funds. This makes it easier for you to keep track of your business income and expenses, which allows for easier record keeping and organization when filing taxes or if you sell the business.
Open a Business Checking and Savings Account
This point builds on the previous paragraph. Opening a business account allows you to make business purchases easier, and you can see all of your business transactions in one statement. It also allows you to set aside money for paying taxes. Many banks offer services geared towards businesses such as low cost checking, business loans, discounts on supplies, and financial advising.
Use Software for Business Accounting
Many people simply log into their bank’s online system to monitor their deposits and expenses. However, when running a business it is essential that you use accounting software to manage your income and expenses. This is important because it allows you to keep accurate record keeping as well as run reports when you need them to obtain financing, purchasing assets or filing taxes. You can use simple spreadsheets in Microsoft Excel or purchase software such as Quickbooks. Google also offers a free “Sheets” web-based software that only requires you to open a Gmail account at no cost.
Read more great tips like these on my CPA blog.
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