Talking Cents

Small Business Accounting Tips

Time and time again, small businesses fail to succeed due to mismanagement or misunderstanding of their financial records. As such, effectively managing your finances is the first step to take in running a successful small business. Accounting for small businesses consist of keeping records of all income and expenses through reports such as: profit and loss statements, cash flow statements and balance sheets. Each of these records highlight different financial aspects of your business, and help you prepare for the coming periods. We at M.A.S Partners, the leading small business accounting firm in Sydney Zetland, understand the importance of effective financial management, and have created a list of useful tips that will help your business develop.

Create a realistic budget
It is extremely important to create a budget (and stick to it) to ensure that your business does not overspend on unnecessary expenses. Using your accounting reports, an accurate prediction on revenue projections can be drawn up, and as such, anticipated expenditures as well. However, be sure to create a budget that is actually realistic. It is common for businesses to create an extremely strict budget that leaves no room for extra expenses, and once they have gone over budget, there is nothing stopping them from further expending. Unrealistic budgets are a slippery slope into bankruptcy and should be avoided.

Separate personal and business assets
When creating a business, it is important to separate assets, through obtaining an ABN and business bank accounts. Business bank accounts allow for easier tracking of business expenses; greater tax deductions; and offers personal liability protection depending on the type of business. It is important to have all business transactions on a business transaction account and not a personal one. This way, your cash flow statements, and other accounting reports all match up.

Have accurate accounting records
It is crucial for a business owner or business accountant to understand how each report affects your financial standing, and how the data can be used to help your business plan. In doing so, accurate reports must be recorded monthly, to ensure business growth. Reports such as balance sheets, cash flow statements and profit and loss statements must all be accurate- ensuring that you know exactly where all your money is going.

Hire a small business accountant
Although all these previous tips can be useful to a new small business, in the long run you should consider hiring a small business accountant. Business accounting not only helps you create accurate accounting records and analyses them for you to come up with financial plans, but also is a far greater way to allocate your time. When hiring a small business accountant, you are freeing up your time to focus on further developing your business- leaving the financial responsibilities in the hands of a professionals. At M.A.S Partners, we handle all of your accounting needs in the most effective way possible, so that you are able to put your attention where your business needs it most. For more information on the services we provide, click here.