There is a direct correlation between successful businesses, no matter big or small, and pursuing the best accounting practices. It may sound cliché but finance is the lifeblood of any business and this truth cannot be challenged. Especially, if you are an entrepreneur or mid-size business owner, you must pursue the following best accounting practices for small businesses to learn how to systematically maintain the accounting books. After all, sound financial data is the key to make well-informed decisions in business.
Best Accounting Practices For Small Businesses?
Select An Appropriate Accounting Method
Out of the two widely practiced accounting methods including accrual and cash, you need to determine the one that suits you most. In the Accrual method, business record transactions by making entry into the books, the moment they take place. On the contrary, in the Cash method, the transactions are being recorded only after the payments have been made or received in cash. Choose the accounting method wisely as both systems come with their own set of pros and cons.
Keep A Foolproof Track Of All Expenditures
Keeping a track of all business expenditures is one such most important accounting practice that you must pursue diligently at any cost. As the business tends to grow, the complexity regarding the accounting method to tends to increase. In that scenario, it becomes essential to get hold of crystal clear cash flow data in front of you through recording all receipts, incoming bills, card and bank statements and recordings of essential other elements.
Maintain Records Accurately
Maintaining records is not merely important for accurate cash flow but it is also essential from the perspective of tax-filings. Therefore, an entrepreneur must imbibe the practice of recording transactions on an everyday basis as a part of the day-to-day business ritual. The needful is to be done by recording cash receipts summary, data related to employee compensation, cheque book entries, depreciation worksheet and all other journal entries that are expected to have a significant impact on the cash flow management.
Keep Personal Drawing Separate From Business Finances
It is naturally tempting to make personal drawings from the business finances but to be successful, an entrepreneur must steer clear of this temptation at all costs to get hold of a transparent image of the business finances. This accounting practice will go a long way in keeping a check on the escalation of personal liability.
Pursue Steady Credit Policies
Pursing credit policies consistently is the key to deal with the limiting concerns related to the accounts receivable. An entrepreneur must formulate foolproof strategies to ensure the best cash flow management emphasizing on continual customer follow-up with customers and other stakeholders to keep bad debts at bay.
Invest In Technology
For small business owners, there is no dearth of constraints in the context of finances and resources. At every single step, it is crucial to consider both, long term advantages and short term advantages, while making any business investment decision and technology investment is no exception to it. There is an available range of dynamic software programs meant to ease the hassles related to invoice processing, payroll management, bookkeeping, and many more through automation. Investing in such software seems to be a prudent decision considering long term ROI.
Seek Professional Expertise
Managing a business is no temporary DIY thing. From time to time, a business owner has to approach professional help, be it for availing loans meant for small businesses, for a professional bookkeeper or for an experienced tax consultant.. Reputable lenders like Indifi are not only competent in catering to the customized loan requirement as per the small business size but they can be your trusted companion by sharing productive tips and resources to enable you to capitalize on their resourcefulness to gain a competitive edge in your domain. Similarly, an experienced tax consultant will be able to save you from committing business blunders.
In nutshell, running a business is certainly demanding but it also provides immense satisfaction at the end that your years of handwork and efforts have begun bearing fruits. If you stick to the aforementioned best-practices, nothing can stop you from being the part of the thriving entrepreneurship culture that is taking the world by storm.
In order to ensure that the small businesses get timely unsecured business loans, Indifi has made the entire process of applying for the unsecured business loan really quick and simple, the small businesses just need to fill a quick online form with their basic business details and KYC, Indifi does all the evaluation work in real-time based on business transactions and businesses get the loan decision as quickly as within 24 hours to fulfill their need for short business loans for loans starting from INR 50,000 up to INR 50 Lacs. Indifi is enabling thousands of small businesses across India to help them grow with simple access to unsecured business loans in India.