5 Accounting Tips for Small Businesses

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5 Accounting Tips For Small Businesses
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Separate Personal And Business Accounts
Most small businesses get one thing wrong - their
accounts. It is one of the most important things
to remember. Avoid using personal accounts for
business transactions. While most entrepreneurs
invest their money in starting a business, the
companys revenue and expense must be separate.
Start a small business with a well-defined
structure and set it as a legal entity.
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Regularly Create Profit Loss Statements
These statements record the business earnings
and expenditures over time. While the law only
requires public companies to create these
statements, every company should put them out
every quarter. Profit loss statements can help
business owners monitor and address their
financial goals. Quarter-by-quarter comparisons
are twice as significant as individual profit and
loss statements.
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Invoice Regularly And Accurately
It is an integral part of owning a business.
However, invoicing can quickly become
time-consuming and annoying, and making mistakes
can damage the ability to receive payments. So,
sending invoices regularly and accurately is
crucial. Small business accounting services can
prove beneficial as professionals ensure detailed
invoices with all business transactions on time.
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Track The Accounts Receivable
While businesses must stay on top of accounts
payable, these do not read aloud how well the
company is doing, unlike accounts receivable. It
means that the business cannot operate if it does
not receive money. Small business accounting
services help review the total amount and
percentage of outstanding revenue. Simply, the
accounts receivable past due should not be more
than 10 to 15.
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Stay Ahead Of Tax Deadlines
Small businesses usually need to file estimated
quarterly tax payments, unlike individuals who
only pay tax once every year. Quarterly payments
involve two tax types - income tax on the
companys profits and self-employment tax that
includes Medicare and Social Security taxes. One
way to do this is by comparing the total federal
income tax on the previous years return to the
withholding amount.
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