If you’ve recently started a new business, or are planning on opening one in the near future, deciding how you will keep track of your income and expenses is probably at the top of your to-do list. If not, it should be. And, given everything else you need to do to launch your business, you’re probably looking for ways to keep your accounting as simple as possible.
In this post, we’ll share some hacks you can use to simplify your accounting and taxes so that you can spend more time generating revenue, closing sales and growing your new business.
1. Do it alone… to start
OK, we don’t mean that literally, but operating as a sole proprietorship can greatly simplify your accounting needs (a profit and loss statement will be your greatest concern). Your taxes will be simple too (you simply report your income on a Schedule C form and include it in your personal tax return). You can even operate as a single-member LLC if legal liability is a concern.
2. Offload your payroll
Once you start hiring employees, you’ll need to issue payroll checks regularly. Chances are, you’ll also be offering some benefits too, like healthcare and a 401(k) plan. Writing checks (or even inputting data and running them on an accounting program) and administering benefits can take up a lot of time that would best be spent elsewhere. CB&T offers a variety of services – in our online digital banking and Treasury Management services -- tailored to your specific administrative needs.
3. Keep business and personal finances separate
Opening a separate bank account for your business should be one of your very first tasks. A separate business bank account makes it much easier to track your business’s revenue and disbursements. Plus, having all of your business transactions run through a dedicated account helps you keep track of your cash flow and makes preparing your tax return much simpler.
4. Invest in digital accounting
Some business owners feel that accounting software is a luxury they can’t afford and that they can “get by” doing their accounting manually. The truth is, accounting software is actually an important component in setting your business up for success from day one. And in today’s digital age, business owners can access this software through their financial institution—some accounting services are even built into your online banking solution. Don’t take a pass on it. From daily journal entries to quarterly and annual reporting, few things will save you as much time and, potentially, as much money as a dedicated accounting service or software. When set up and used properly, accounting software programs such as QuickBooks or Xero can streamline many of your most vital accounting tasks, including payroll, invoicing and expense tracking. In addition to keeping your finances current, proper digital accounting greatly reduces the risk of costly errors.
5. Organize and categorize
Organizing doesn’t come naturally to everyone but it can be learned. That’s great news because few things can impact your business as much as the amount of effort put into keeping your financial records organized. The fact is, there’s just too much at stake in your business to ignore organization. Knowing where and how to access important financial
information is key. A couple of lost receipts or invoices can result in miscalculations that can send the wrong message about your business’s financial health. Similarly, categorizing expenses streamlines your accounting by simplifying account coding—the manner in which general ledger codes are assigned to individual transactions. By ensuring that transactions are properly coded, you can help ensure accurate reporting.
6. Take advantage of merchant services solutions
Merchant services were created to enable businesses to get paid quickly, easily and efficiently. They can include everything from smartphone-based card readers and online payment capability to complete in-store point-of-sale systems. California Bank & Trust offers a full range of merchant service solutions that can help simplify your business.
Call or visit your local branch for more information.