Many small businesses could save themselves a whole lot of stress if they were to follow a set of best accounting practices. Implementing some of these could save time, headaches and in extreme situations, legal ramifications. Here is a list of Best Accounting Practices for Small Businesses.

Practice good accounting from the very beginning

Good accounting provides a company with long term success and security. As you are starting and building  your business, good accounting practices should be a priority from the very beginning.

If you place these practices into your workflow at the start, it will be easier for you to maintain a healthy financial system. It is much easier to do it at the beginning than to weed through a year or more of unrecorded documents. Make it easier on yourself from the start.

Technology can be a lifesaver

There are so many different and affordable options available to you to help track your finances. These include things like payments, invoice, payroll and more. View the purchase of these services as an investment in your financial health and sanity. The services that technology can provide can make your life so much easier and using them can be a stress reliever.

Accountants & Bookkeepers are your friends

One of the key characteristics of any successful business owner is to know their strengths and weaknesses. If you know that accounting really isn’t your thing, hiring an accounting professional may be the best option. Whether it is a bookkeeper or a full fledged CPA, these professionals can take the worry of financial management and bookkeeping off of your hands. You will want to try and provide your company with the security of a professional as soon as it is to the point where you can afford it and it is necessary. In today’s market, there are much more affordable than you might think.

Keep Personal & Business finances separate

In the beginning of a small or startup business, business and personal finances can become easily entangled. This is one of the biggest mistakes that you can make. Don’t get into the habit of mixing up your finances. Set up clear separate bank accounts and budgets for your business and personal lives.

Draw clear boundaries

Making sure that boundaries are clear in your business and finance practices is very important. As a rule of thumb, don’t hire a family member to take care of your books. And if you do, make sure that the business relationship and the family dynamics are very clear and clean cut. Making the mistake of not having boundaries can lead to business dysfunction and stressed family relationships. There have been too many examples of the lines between business and personal being crossed and as a result, the business and it’s income suffers.

Keep a trail

It is important that you get in the habit of documenting each and every transaction that your business makes. Whether it is a paper or electronic receipt, you should keep them all. In addition to receipts, using spreadsheets or accounting software to track anything and everything related to your business is a best practice. You should also be using a dedicated business credit card and bank account. The information that all of this information provides will not only be able to show you how well your business is or is not doing, but it will make tax preparation a breeze. Document, document, document.

Don’t fear the IRS Learn the Lingo

Contrary  to popular belief, the IRS is not out to get you. Nobody likes paying taxes but again, it is a necessary evil. Getting behind on tax payments can be very easy to do. If this happens to you or you anticipate that it will happen, it is better that you be proactive in reaching out to the IRS. They are happy to discuss your options. At the same time, they are happy to educate you on any questions that you might have. Use them to their fullest advantage to gain information that will help your business grow.

Learn the Lingo

Accounting jargon can be difficult to understand. Depending on the nature and scale of your business, the terms and vocabulary can be daunting. It is in your best interest however that you educate yourself on what they mean. In addition, many software programs aim to use down to earth language. Utilize them, as well as classes, books and other tools in order to get a better grip on the basics.

Outsource Payroll

One of the most time consuming tasks that a business can have is payroll. It takes time away from your business, time that could be used to move your business forward. Make pay day easier with outside tools or services. Outsourcing payroll does not necessarily mean that you have to hire a large payroll company; it can mean utilizing payroll software or a smaller company. Many banks and organizations can help with finding the best solution.

Don’t procrastinate on your taxes

Everybody hates tax season. It can be stressful but is a necessary evil. Taking time to prepare for them before April 15th will take your mind off of the stress. Preparation includes keeping accurate records at all time, inputting data when necessary, tracking expenses and income and making quarterly tax payments when necessary.