Small business and startup entrepreneurs have a long list of to-dos on a daily basis. They are responsible for overseeing the operations of all verticals of the business. Amid all the responsibilities, it gets difficult for an entrepreneur to manage books of accounts. And they cannot afford to hire an accounting expert. Are you struggling with the same problem? Don’t worry, we have a solution for you.
Find someone from the existing team who has basic accounting knowledge and instruct them to follow these small business accounting best practices. That’s it. With these best practices, you can expect accurate data, that’s our assurance.
Top Small Business Accounting Best Practices
Following are the easiest small business accounting best practices you should implement right away:
#1 Segregate Your Small Business & Personal Bank Account
If you are managing your business transactions from your personal bank account then this is the worst mistake an entrepreneur can commit. Even if you are using your personal funds to build your business, you should keep both accounts separate. It will not only encourage transparency but also aids in getting finance and makes the compliance process simpler.
Following are the advantages of keeping your business and banking separate:
- Organize and manage your business activities well
- Builds reputation
- Makes you appear trustworthy
- Aids in maintaining accurate records
- Easy to audit
- Better handling of financial resources
#2 Track Receivables Carefully
To keep your business rolling, you need funds. Late payment is like throwing a spanner in rolling that causes hindrances in the growth of your business. Your small business accounting team should make sure all the clients are paying their bills within a stipulated time. If it doesn’t, make your invoicing terms stringent, have strong internal communication, and get paid on time.
In Munim – small business accounting as well as billing software you can filter the invoice which is overdue. If you are looking for efficient online billing software then go anywhere else. Just sign up with Munim and use all the features for free*.
The following are the benefits of tracking accounts receivable:
- Facilitates smooth operation
- Enables short to medium-term planning
- Receive a constant flow of funds
#3 Have A Well-defined Budget For Every Business Activity
If you want to make your business profitable then you should have a well-defined budget for every business from procurement to marketing to logistics. When you have a specified budget, you can assess expected income and expenses enabling you to project monthly or quarterly revenue.
Following are some of the advantages of having a set budget:
- Proper allocation of resources
- Better decision making
- An approximate idea of the results
- Have a foresight
#4 Create Invoices Accurately
Invoicing is an important part of any business organization. It is a step if done correctly then you will get timely payments. Even small errors in invoicing can impact your business in a significant way and can impact your capacity to get paid thus, you need a solution that can accurately create invoices in a timely manner.
Here are some of the benefits of accurate invoicing:
- Efficient invoicing can be used as a record
- Makes your business appear professional
- Can be used as a piece of evidence in litigation
- Helps in sales forecasting
- Aids in financial projection
#5 Record & Track Each Transaction
Whether you want to track the growth of your business or stay compliant with regulatory requirements, you need to keep a record of each transaction your company makes either with vendors, customers, or third parties. Ensure that you are keeping an accurate record of all transactions.
You may think of hiring an accountant or outsourcing the same, that’s a good idea. Before proceeding, we want you to consider Munim – a small business accounting software that is capable of maintaining and tracking all financial transactions. With our software, it gets easier for you to maintain crystal-clear financial records. And the best thing is, it is free* (for a limited period).
#6 Keep Your Accounting Books Updated
Recording transactions in your accounting books is one of the important responsibilities of an accountant. With small business accounting software like Munim, it gets easier for you to store (and retrieve) financial records. Also, the exact time is documented automatically. The same records you can further use for taxation and compliance purposes.
And as per the laws of the Government of India, companies should maintain the records of all the transactions for 8 years from immediately preceding the current financial year.
#7 Maintain Accurate Inventory Data
To prepare proper financial statements, businesses need accurate inventory data. Includes, the cost of goods sold (COGS), and the value of in-hand inventory are a few important data points that are required. The conventional method where goods are counted manually is a tedious process. Rather you should opt for an automated system that comes with Munim that automatically adjusts the number as sales are records. It makes the process free from errors and easier to track.
#8 Setup Access Control In Your Accounting Software
Financial records are sensitive information that should be kept as confidential as possible. Not everyone from your team should have access to all your financial records. With Munim, you can control the access to modules and rights to create, edit or delete entries for your teammates. Also, you can update the settings in just a few seconds whenever need be.
Over To You
So these are the small business accounting best practices that you can use to make the bookkeeping process more efficient. We hope after reading this blog you will make strides to implement these accounting best practices. If you have any queries regarding Munim – the best accounting software for small businesses in India, then feel free to reach out. Our team would be happy to help you.