9 Accounting Tips for Small Businesses

Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Intuit accepts no responsibility for the accuracy, legality, or content on these sites. One of the last things you’ll do after closing out your books for the year is file forms with the IRS.

Best for Service-Based Businesses

If you have employees, you likely need to run payroll weekly, but your pay period may also fall into a different category, such as bi-weekly or semi-monthly. You’ll want to process payroll on your set dates and research your payroll tax requirements, which can differ for each business. You’ll want to do invoicing weekly in most cases, although some businesses may invoice monthly or as they make credit sales.

While tossing receipts in a box might seem tempting, it leads to chaos at tax time. The IRS outlines these different business taxes as income, excise, employment, and self-employment taxes. All businesses pay income tax unless the company is considered a partnership. Small businesses would not have to pay self-employment tax since it’s an organization with employees, but the company will have to pay employment taxes. Some software targets small business accounting professionals or bookkeepers, while other programs tailor to business owners looking to develop their accounting skills.

small business accounting tips for business owners

There are three financial statements that all small businesses should consider creating. Minimum deposit requirements can depend on the type of business account and whether you’re opening the account at a traditional bank, credit union, or online bank. There are a number of small business tax deductions that you can take advantage of to minimize your tax bill. Some common tax deductions include the what is the difference between negative assurance and positive assurance cost of goods sold, employee pay and benefits, auto maintenance, travel expenses, marketing and advertising, etc. We’ve tested the top accounting tools to help you find the best one for managing your company’s money and—hopefully—improving profitability. If you’re still feeling uncertain, don’t be afraid to speak with a professional bookkeeping service about securing their help.

Check your inventory

1. Financial reports are required if the company files business deductions or depreciation.
2. It’s possible to do a minimal setup and then jump into accepting payments, creating invoices, and paying bills.
3. Generally speaking, the more you need from an accounting service, the longer it takes to set it up and the higher the monthly payment.
4. If this is your first time exploring small business accounting, visit our helpful glossary to become familiar with basic accounting terms.

When you start a business, open a separate business bank account that will keep your business finances separate from your personal ones. At the end of the month, quarter, or year (or any time in-between), you can generate financial reports from your accounting software. Take some time to set up an invoicing system, including tracking the work completion, deciding the frequency of invoicing, defining payment methods and creating professional-looking invoices. If you have expenses on the road, you can usually take pictures of receipts with your smartphone and upload them to your accounting app. You can save it as a draft or a final version and either print it or email it. You can sometimes create a PDF version of the invoice, copy it, record a payment on it, and set it up to recur on a regular schedule.

Examples of liabilities include employee wages, income taxes, mortgage loans, and accounts payable. Alternatively, as you set up your accounting software, you should see a list of optional financial accounts for you to add to your chart of accounts and general ledger. Some processors charge an interchange plus rate, typically around 2.9%, and $0.30 per transaction.

The requirements of small business accounting come down to a handful of best practices and essential reports, which you can do manually or with accounting software. Other accounting services small businesses may use include bookkeeping, strategic finance, and tax accounting. Small businesses may benefit from an accountant as the company grows and the need for more financial tracking, recording, forecasting, and budgeting accrues. Bookkeeping involves the day-to-day administrative tasks of recording sales and financial transactions. Once you connect your business bank accounts and credit cards to a software, the business’s financial transactions show up in a queue and are grouped into categories. Small-business accounting is a set of financial activities for the processing, measurement, and communication of a business’s finances.