Small Business Accounting Checklist
If you own and operate a small business, it can be difficult to keep track of everything that you must do in order to ensure smooth operation and maximum income potential. One of the most difficult aspects of running a business is the accounting aspect. From running payroll to entering accounts payable, and from ensuring vendors get paid to ensuring that you get paid, there is a lot on your plate where accounting is concerned. This small business accounting checklist should help you to organize your accounting responsibilities and ensure that you don’t miss any major processes or procedures.
Determine Your Accounting Method
First and foremost, determine your method of accounting. Will it be cash accounting, in which all payments and income are recorded once they are received, or will it be accrual accounting, in which transactions are recorded as they occur. The former method is best for small businesses, as most small businesses don’t have enough transactions to warrant accrual accounting.
Set Up Business Accounts
Once you have determined the best method of small business accounting for your company, it’s time to separate your personal accounts from your business accounts. Not only is separating your personal finances from those of your business’s a smart move in terms of record keeping, but doing so will also allow you to know just how much personal and business income you actually have. For instance, though you may pay yourself from your business account, once you do so, think of it as you would an income from any other job source. That amount is all that you have to spend on personal expenses for the next week or two. What is left in the business account is there for you to grow your business and pay off business expenses. If you get the two confused, you might find that you don’t have enough at the end of the pay period to pay your employees, or vice versa; you won’t have enough in your own personal account to pay your mortgage!
Settle the Logistics
Finally, determine who is going to keep track of your books, how often and how they’re going to do so. You want someone who you trust to keep track of your books as, after all, it is your income at risk. Also, if you’re operating a small business, you likely cannot afford to have an accountant on staff at all times. Determine how much time is necessary to keep your books clean in a cost effective manner. Finally, discuss accounting procedures with your new accountant to ensure that you and them are on the same page.
When it comes to business accounting, you don’t want to miss a thing. Use this checklist to ensure that you don’t!