Top 9 Accounting and Bookkeeping Tips for Small Business Owners

It is essential that small business owners are involved in financial management. These are my top nine accounting and bookkeeping tips that will simplify your life and help you to understand how accounting information can improve the success of your company.


This article contains bookkeeping tips.

  1. Separate your personal and business finances
  2. Earn a salary
  3. Receipt expenses
  4. Receipt and track business mileage
  5. Keep your receipts
  6. You can outsource your payroll
  7. Get help from a professional to set up your accounting software
  8. Assign bookkeeping tasks
  9. Analyze your accounting records


Why bookkeeping is important

Bookkeeping is not a sin. A robust and accurate accounting system is essential. According to the United States Bureau of Labor Statistics20% of all new businesses fail within their first year and 50% within five years. According to experts from Griffith University , financial literacy is a key factor in the survival of small businesses. This includes knowledge about accounting software. While you don’t have to do all the bookkeeping, it is important to learn how to organize your business so that the bookkeeping is more efficient and accurate.

Bookkeeping is only as good as how the business is run.

My bookkeeping and accounting tips are not about the bookkeeping system but how you run your business. Bookkeeping is more than just keeping a list of receipts and invoices. It also requires a detailed understanding of your bank and credit card statements. A bookkeeper will keep track of all transactions in your bank or credit card accounts, and then reconcile your bank statements and books. This reconciliation allows them to verify that all transactions were properly recorded.


The “Golden Rule” for bookkeeping is All business transactions and all personal transactions should be credited to your credit card and business bank accounts.


The following tips will help you to follow the Golden Rule.

Top 9 Accounting and Bookkeeping Tips

1. Separate your personal and business finances

This is a restatement the Golden Rule mentioned above. It’s also one of the most frequently violated rules. It doesn’t matter if you’re self-employed, freelancer or not. I strongly recommend that you have separate credit and bank accounts for your business.

You can reduce the amount of transactions that your bookkeeper has to categorize and reconcile by removing all personal transactions from business accounts. I have personally managed bookkeeping for small businesses where over half the transactions in their “business accounts” were personal. It can be time-consuming and expensive to sort through personal transactions.

2. 2.

C-corporations or S-corporations owners must pay themselves a reasonable salary, and have it run through the payroll system as any other employee. Although it is technically an owner’s draw, the salary will not be included in payroll, I recommend that partners, self-employed owners and freelancers also receive a “salary”.

Your business can pay you a salary, which reinforces the idea that it is an independent entity. Instead of having multiple transactions in a month where the business pays expenses on your behalf, the business should write one check per month which you deposit into a separate account to pay personal expenses.

3. 3.Reimburse yourself for business expenses

Sometimes, you will need to pay business expenses with personal funds. These business expenses must appear in your company bank account, according to the Golden Rule. You can request that the company send you a check to cover the expenses you have paid using personal funds. This should not be included in your monthly salary.

Reimbursement for yourself should be exactly the same as that for employees. Attach receipts and a spreadsheet listing all expenses. The business will then send you a check detailing the exact amount. Although this can be a hassle, it will ensure that your bookkeeper deducts expenses because they were paid with a check taken from the business account.

4. Track and reimburse business mileage

Your business can deduct a standard mile rate ( 57.5cs for 2020 ) for business mileage that you drive in your personal vehicle. Keep track of the date, mileage, and purpose for each business trip, and submit it to your monthly expenses, as described in tip 3.

Your personal vehicle expenses should not be paid directly by the business, even for fuel used exclusively for business purposes. To pay for fuel and maintenance, you should use the 57.5c per mile that the company provides.

5. Keep your receipts

Although bookkeeping systems do not rely on receipts to identify transactions they are required by the IRS for all tax deductions. A file folder is a traditional way to keep receipts. This allows you to place receipts in a specific vendor’s folder. An alternative method is to scan receipts, and attach an electronic copy to each transaction in your bookkeeping software. This is an excellent function that many accounting software include free of charge.

6. 6.

A study by Wasp Barcode Technologies found that 50% small businesses outsource their payroll management. It is a great idea to do so. It is not difficult to send out paychecks, withhold employee taxes, or file payroll tax returns. This can all be done easily and at a very affordable price. Many payroll providers integrate with your accounting software to automatically load the required accounting entries.

In order to ensure that your outsourcing payroll provider has access to your primary account, I recommend you open a separate business checking account for payroll. You can also ensure that your payroll account has money even if your primary account becomes insufficient. Bouncing payroll checks is one of the worst things for employee morale.

7. Get help from a professional to set up your accounting software

Although there are many options for small-business accounting software, it can be difficult to set up the software correctly. It will be easier to use the software if it is customized to your business. 82% percent of experts who surveyed think that small business owners should have a professional set up their computer accounting system.

To customize your customer, vendor, or invoice list, hire a professional. Make sure they show you how to modify these lists. These lists will make it easy to do everyday transactions such as paying bills and issuing invoices.

8. Assign Bookkeeping Tasks

All small business owners can use the seven accounting and bookkeeping tips listed above, regardless of whether they outsource or do it themselves. It’s now time to decide how much work you will do. Here are some of the most important bookkeeping tasks, and my recommendations for starting a small business.

Bookkeeping Task Suggested Frequency To assign
Invoices for Customers Weekly Employee or owner
Customer Payments Received Weekly Employee or owner
Customer Payments in Bank Weekly Employee or owner
Record Vendor Invoices Received Weekly Employee or owner
Issue checks to pay vendors Weekly Employee or owner
Record Credit Cards Charges Weekly Employee or owner
Reconcile Bank Account Transactions and Credit Card Cards to Statements Monthly Bookkeeping firm
Prevent More Entries Monthly Bookkeeping firm
Prepare Monthly Financial Statements Monthly Bookkeeping firm

Bookkeeping tasks such as paying bills and issuing invoices are essential to your business. These tasks can be difficult to outsource. Other tasks, such as reconciling accounts and closing books, are not part of your business operations and should be left to professionals.

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To get the most out of the software, I recommend that the new owner perform the weekly tasks. We offer great free tutorials for QuickBooks Online. These weekly tasks can be assigned to employees to make them daily tasks as your company grows.

9. 9. Analyze your Accounting Reports

Your bookkeeper should not be able to review your accounting reports. Their job is to enter data into the software. The manager is responsible for reviewing the output of the accounting software to manage the business. Cash flow is a problem for small businesses. Here are some simple reports to help you.

  • Aged accounts receivables (A/R: This report will show you how much each customer owes and whether or not the debt is overdue. The report will tell you when to contact the customer regarding payment and give you an idea of how much cash should be collected in the near future.
  • A/P aged accounts payable: This page shows you how much each vendor owes you and when it is due. This allows you to see your cash flow and predict cash flow problems that need to be addressed immediately.
  • Cash flow statement This statement shows how your cash flows are separated by investing, operating, and financing activities. Negative cash flow is a problem that could be serious and should be addressed.

82% experts agree that small business owners need to be able to create and understand financial statements using their computer accounting software. These statements should be generated by you so you can view them at least once a week.

Bottom line

Bookkeeping is a headache for small business owners. It is not possible to outsource the task. These nine accounting and bookkeeping tips will help you to organize your business and keep it running smoothly.