By Rae Steinbach
As a new business owner, you probably want to hit the ground running and focus on the tasks that will bring value to your small business. Maybe you’ve even found an impactful co-working space to operate from. While it is understandable that you would want to spend most of your time on things like product development and marketing, you can’t forget the finer details of running a company.
As a newly minted business person, it might seem like you can worry about some of the details of accounting later on. But it is important to consider some of these points early on. Of course, having a good accounting software is one step in the right direction, however, there is much more to accounting than keeping a set of financial records. Here are 5 accounting tips for new businesses.
Start A Business Bank Account
If you are a small business owner working entirely on your own, it might seem like it is not a big deal to use your personal bank account for your business. While it looks simpler to just have one bank account, moving forward, you’ll find it difficult to separate your personal income and expenses from the financials of your business. Additionally, using one account for both your personal life and your business can get you in trouble with the tax authorities in the future. Start your company off on the right foot by opening a separate account for your business.
Track Your Expenses
It’s easy to incur a lot of expenses when you are out running your business every day. In some cases, you might even spend some of your personal money to cover a business expense. If you don’t carefully record all of these transactions, you can easily lose track. Consider installing an expense-tracking app on your phone to help you track and manage expenses.
Consider The Legal Structure Of Your Company
New business owners have a number of options when it comes to the legal structure of the company. For some small businesses, a sole proprietorship might be the right option; for others, it might make more sense to go with a partnership or an LLC. Different business structures have different tax benefits and liabilities, so it is important to carefully research your options and choose the one that is right for your business.
Stay After Late Payers And Non-Payers
Some clients and customers may try to pay late and others may try to get away without paying at all. As a person running a new business, you cannot afford to wait for customers to pay only when they feel like it or to let them get away with not paying at all.
If you have customers who have a tendency to pay late or ones who seem like they might not pay at all, you have to stay after them. The first tip is to make sure you get your invoices out as soon as you meet your end of the contract. Once the payment date has lapsed, you then need to start sending reminders through email and over the phone.
Pay Your Suppliers On Time
In the same way that you do not want people to pay you late, your suppliers are depending on you to make your payments on time. If you build a good reputation with your suppliers, they will be there to help when you need stock or supplies in a hurry. Make sure to pay your suppliers on time and follow the rules of the agreement you have with them.
You might be busy starting a new business, but you do not want to leave the accounting issues for the last minute. If you get your books in order early and handle the financial end of your business responsibly, you will increase your chances of success and save yourself a lot of trouble down the road.
Edits: Kath C. Eustaquio-Derla
Rae Steinbach is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to New York City to pursue her career and continue curating quality content. Rae is passionate about travel, food, writing, and of course, FueledCollective.