Are these small business accounting challenges making you lose sleep? This will help.
Small business accounting challenges can rob you of sleep at night, and drain your enthusiasm at work. Handling your accounting tasks in-house is no mean feat. It’s critical to the success of your business, and yet it can be incredibly complex. It might even be the one thing that can make you hate being an entrepreneur. Don’t let the books get you down. Or be the cause of the downfall of your business. Accounting for small business has its challenges, but they are not insurmountable, and it’s not just you. Take a look at the four most common that many companies face:
Small Business Accounting Challenge #1: Cash Flow, or Lack Thereof
Failure to earmark funds that require allocation to specific recurring expenses is one of the top reasons for the failure of a business. Why? Because managing cash flow is one of the biggest challenges facing small businesses. This isn’t because you aren’t paying attention, it’s often due to issues that seem to be beyond your control, such as overdue payments from customers and unexpected or improperly estimated bills.
What’s the trick? The key to cash flow includes:
- Don’t count your income until it’s in the bank – deals are the backbone of your business, but don’t include potential profits as income until you have payments
- Analyze your bills, spending, and costs carefully – knowing what recurring payments are coming due each month is vital to managing your cash flow
- Chase down those payments – don’t be lax about collecting from your customers
Small Business Accounting Challenge #2: Bookkeeping by the Seat of Your Pants
Have you been doing the bookkeeping for your business? Are you a trained bookkeeper or accountant? If you or your wife or your sister or your sales manager have been doing the books as a way to keep the wheels turning, it’s time to make a change. Bookkeeping is the act of recording everything, and we mean everything. If it’s related in any way to the finances of your business, you must record it, and you must record it properly.
One of the biggest challenges small businesses face is bad bookkeeping. But you’re not alone. Many small business owners start this way. But before you get in too deep and you find that you’re facing financial challenges, errors, and issues affecting the health and existence of your company, hire a professional. Don’t take bookkeeping lightly and you’ll find this accounting challenge is no longer an issue.
Small Business Accounting Challenge #3: Payroll Is About More Than Just Cutting Checks
Everyone wants to get paid, that’s why you have payroll. But boy, is it a pain! It’s complicated and time-consuming and labor intensive. And it’s confusing! There are a lot of regulations and requirements involved in paying your employees. Are they employees or are they contractors? Do they get benefits and vacation time? What about deducting taxes? And are you recording everything accurately for the IRS?
Effective payroll management includes:
- Organizational consistency
- Correct tax coding and filing
- Employee tracking
- The right payroll software
- Understanding of regulations and compliance
Small Business Accounting Challenge #4: Reconciling Your Books Regularly, Not Sporadically
The critical task of reconciling your books means that the balance on your books matches the balance on your bank account. For accuracy, someone must record every transaction as soon as it happens. Why do we do this? To make sure there are no mistakes in your bookkeeping at any point during the day, week, month, or year. How often should you reconcile? Monthly at the very least, but weekly is fine, and daily is ideal. Without proper reconciliation, your books can easily and quickly get out of sync with your actual bank balance. Not only does this make it much more difficult to maintain your accounting over time, but it can lead to serious problems should the IRS come calling for an audit.
What do we know about all of these small business accounting challenges? We know that hiring a professional is the best way to let you focus on your business and rest easy knowing your financial data is accurate. Click or call 678-990-0924 for a free consultation to learn how a small business accounting firm can help your business.