40% of small business owners feel that financial management is the most difficult part of operating a business.

Staying on top of your business finances can bring no shortage of headaches, anxiety, and confusion.

However, effectively managing your company’s numbers can help you save money in the long run. When it comes to owning a small business, proper bookkeeping can even keep you in the black.

It can be tough identifying solutions to financial management when you find yourself dreading it.

We’ve got answers for you.

In this post, we’ll cover the top small business accounting tips you can implement today!

1. Build a Strategy for Daily Finance Management

As a small business owner, you encounter numbers on a daily basis. Whether your business is thriving or stumbling along, you are always negotiating profit margins, costs, and taxes.

In order to keep up with all of this, it’s essential to craft a strategy for daily management of business finances.

This doesn’t mean that you have to sit in front of spreadsheets for hours every morning. (Who wants to do that?)

It does mean keeping track of expenses, sending out invoices in a timely fashion, and being mindful of upcoming costs.

Many small business owners rely on an accountant to handle the day-to-day management of business finances. Others utilize automated bookkeeping services to monitor delivery and receipt of invoices and current expenses.

Whatever the case, implement a strategy that ensures you are reviewing your business expenses on a daily basis and effectively monitoring income levels.

What’s more, ensure that you are sitting down with your business finances at least once a week. This is crucial even if you rely on accounting assistance through software or employee work.

A weekly review can hold your daily management strategy in place and even help you streamline it further. Your review should include a quick overview of expenses, accounts payable and receivable, sales performance, and fees.

2. Keep Accounts Distinct

When it comes to small business accounting tips, make sure that you properly manage all of your accounts themselves.

This involves distinguishing your business and personal accounts. This may mean simply setting up separate credit cards and checking accounts associated for both.

Be very mindful of spending decisions, ensuring that only business accounts are used for business-related costs. The same goes for your personal account.

We recommend relying solely on credit cards for all business transactions. This is because credit card statements provide you with an automatic and easy way to keep track of expenses.

Cash payments can be easy to overlook; many business owners struggle to stay on top of receipt management. Neglected cash payments can lead to inaccuracy in cash flow management reports and poor forecasting.

3. Generate Monthly Financial Reports

In addition to daily finance management, produce monthly reports that give a holistic understanding of your company’s fiscal health.

This may involve generating a profit and loss statement, a worksheet that details gross and net income and total expenses. Most statements break down expenses into salary and benefits, operation costs, legal fees, taxes, and more.

Others will include total assets, including liquid cash, grants, accounts receivable and payable, and other black revenue.

If you rely on an accountant, you will likely receive monthly reports of this nature already. If you are managing small business finances on your own, you can still easily produce a financial statement of this nature via bookkeeping software programs.

Learn more about ScaleFactor’s bookkeeping services for small businesses.

Monthly financial reports also give you a great opportunity to calculate your own salary. At the beginning of a small business’s life path, most owners aim to receive at least 10% of net profits.

4. Always Anticipate the Future

Small business accounting isn’t all about the present. While it can be hard to think of the future as a small business, it’s essential to do so.

When you compile a monthly financial report, take the time to anticipate your business’s financial trajectory. This could simply involve identifying upcoming costs, such as tax payments or legal fees.

It may incorporate more nuanced plans for company expansion, including budgeting for new hires and higher rent.

Forecasting in this way can enable you to effectively utilize existing assets. It can also help you confidently plan for other significant milestones in your business’s evolution.

Forecast effectively by analyzing your financial data on a monthly basis. Data-backed analysis can ensure smart investment moves.

5. Create Balance Sheets

A balance sheet is designed to give a snapshot of your business’s financial health. It is more holistic than a profit and loss statement.

Think of a balance sheet like a yearly check-up at the doctor’s office. A check-up may include a physical examination, blood tests, and weight analysis. Your physician may give you some recommendations following your check-up for optimizing your health in the future.

Balance sheets should detail your gross and net business assets, including its liabilities. They should also give a birds-eye view of your working capital–what you need to run your business on a daily basis.

Lastly, these sheets provide an overview of business liquidity, which is essentially your financial ability to navigate debt and daily expenses.

Balance sheets are extremely useful when it comes to long-term forecasting (see tip #4). They are also a helpful tool when it comes to identifying solutions for better cash management.

6. Understand Your Cash Flow

When it comes to small business accounting tips, education is everything. The more you understand the numbers in front of you, the greater your odds are at managing them well.

As you perform weekly and monthly financial reviews, consider producing a cash flow statement. These statements give you a broader understanding of cash movement within (and outside) of your company.

A cash flow statement essentially monitors income direction. It also includes the element of time, enabling you to visualize payment cycles and seasonal expenses.

Cash flow statements can give you the knowledge you need to anticipate expenses and more appropriately allocate income. They are also useful when building financial trajectories.

You don’t have to generate a cash flow statement, however, in order to understand monetary motion. Simply using the right technology can help you get a holistic visual of how cash is functioning in your business model.

If you choose to automate your bookkeeping services, for example, you’ll be able to easily visualize metrics and data about cash movement.

7. Find Ways to Cut Costs

Small business accounting isn’t just about managing numbers and data. It’s also about making smart financial decisions to maximize your profits.

When managing small business finances, constantly identify ways to reduce company costs. Your balance sheets, cash flow statements, and profit and loss statements can be immensely helpful in this regard.

If you do hire an accountant (see the next tip), he or she will likely be able to help you identify solutions for reducing business expenses.

One way to stay on top of cost management is to rent instead of purchase, whether you’re seeking corporate office space or high-tech office equipment. Automating tasks can also cut costs across the board.

8. Hire an Accountant

At the end of the day, if you are struggling with staying organized and developing a system for small business bookkeeping, consult professionals. Hiring an accountant can give you the peace of mind you need when it comes to business finances.

Accountants are well-versed in many aspects of financial management and are more likely to be savvy with corporate numbers than standard bookkeepers. They’ll help you navigate tax season smoothly.

What’s more, they can help you select the software or technological tools you need for smart bookkeeping.

Hiring an accountant can free up your schedule further so that you can focus on other critical components of business operations.

9. Choose Automated Bookkeeping Services

If hiring an accountant is too large of an investment at the moment, don’t worry. You can invest in automated bookkeeping services at a fraction of the cost and with equally high value.

Automated services enable you to keep all of those important numbers in one digital location. What’s more, you can be confident that your financial reports are always error-free with automated computing.

You’ll also be able to streamline a variety of financial tasks, like invoice remittance, via automated services. Stay on top of bill payments with automated payment reminders, and always feel confident in your cash flow management.

Most importantly, automated bookkeeping always keeps a digital record of every financial step you take. This is crucial for tax season and for keeping an eye on the future.

Small Business Accounting Tips and Solutions

Small business accounting doesn’t have to be the worst part of operating a business.

Monitor finances comfortably by establishing a plan for daily and monthly management. Keep business and personal accounts separate and get in the habit of anticipating the future.

Generate the data you need to make effective forecasting and reduce costs.

All in all, automated bookkeeping services offers you everything you need to easily and effectively manage business finances with clarity and control.

Want more small business accounting tips? Get started on your accounting solutions now!

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