Most business owners focus more on increasing their profit margins. However, you need to balance all things if you want your business to grow and, at the same time, avoid unnecessary problems. If you just focus on the profit aspect of your business, you are likely to miss out on other critical functions like filing taxes on time. Besides, you are likely not conversant with tax calculations and how to appropriately separate them from your business proceeds.
Running a successful business goes beyond buying and selling goods and services or even interacting with customers. It also involves having a clear understanding of your company's financial position so that you can make sound decisions. To achieve this, you need to trace your expenditure and income throughout the year. However, it's hard to do it without proper bookkeeping.
And although you may be tempted to do the bookkeeping yourself, it might not be easy, given that you have other business operations that demand your attention.
As a small business owner, it is important to have a basic understanding of how accounting works. Understanding basic accounting will help provide you with the knowledge you need to keep your business afloat.
#1: Keep Things Separate
As a small business, you will want to ensure that you keep your personal and business expenses separate. Far too many business owners make the mistake of mixing up their personal and business expenses.
Most small business owners handle the vast majority of their business financial matters on their own. If you're one of these and have no obvious problems with your books, could you still benefit from a checkup by an accountant? The answer may be yes, and here are three times when it could be one of the smartest decisions you'll make.
1. After Your First Year as an Employer
Most people think about what they need to do in order to hire the help they need.
Paying your employees is all about rewarding them for a job well done. You count on your team to show up daily, handle their tasks, satisfy clients, and keep the profits rolling in. Being able to demonstrate your appreciation by cutting checks in a timely fashion keeps your staff motivated to do well both now and in the future. However, the payroll aspect of your business may be starting to become so time-consuming that you risk being late with payments.