Choosing the path of becoming a business owner is a rough one. Before taking this path, you must have an idea on how to understand the business and all its aspects, especially the financial side. As a self-employed person who wants to go solo in the business, it is important to know something about bookkeeping. And now is the right time to know more about it. That being said, here are accounting tips for the flying solo business owner.
1. Separate different finances
As a businessman, you have two types of finances in your life—personal and business. These two finances should not be intertwined since each serves a different purpose. By knowing how to separate your business and personal finances, you will be able to keep track of each expense without causing any confusion and wrong computations.
Remember that personal finances are strictly for personal use and business finances are strictly for business use. A way to separate the two is to store each in different bank accounts and credit cards so that you can identify it easier and use the right one in every transaction.
2. Keep track of your income
This is an essential task of bookkeeping for the business. Keeping track of your income will give you the idea on how much you are earning in different time frames. A way for you to be able to keep track of your income is to make sure of billing every customer once products or services are paid for. This can be made possible efficiently if you have a system that notifies you once a customer have already paid, whether paid or outstanding.
3. Track your expenses, too
Income should not be the only thing that should be tracked; you should also pay attention to your expenses. Keeping track of both income and expenses will give you numbers on how much you are earning and spending at the same time. As a businessman, you should keep a record of your business-related expenses, such as inventory purchases, asset purchases, rent, and utilities for you to budget your money efficiently. It is natural to know where your money is going and to identify if anyone is stealing from the business.
4. Monitor bank statements
The bank is the place where you store your savings so always find the time to double check your bank account. This can be done monthly or depending on your schedule. When checking your bank account, make sure to check for unusual activity (unusual withdrawals and debit card usages), excessive bank charges, money transfers, and cash balance. If there are any suspicious activities, then it is time to contact your bank.
5. Use reliable accounting software
Attaining accounting software is a must have and should be on your priority list. The costs of accounting software are expensive, but it is a good investment since it can help your accounting work in many ways, which are the recording of business transactions, production of balance sheets and income statement, and keeping your books in order.
People who have decided to fly solo and start their own business should know that they need at least basic accounting knowledge to understand how accounting affects their business decisions. Having poor accounting skills can cause damage to the business, so it is best to get bookkeeping outsourcing services from a trusted outsourcing company or learn the basics of accounting to understand the business’ finances.