How to Keep Small Business Accounting Under Control

Leaving a steady job on account of your own small business deserves the words of praise and support. Indeed, when you’re your own boss, you can develop your business and your skills the way you like it. When you’re a part of a company, you most often just put to practice other people’s ideas.

Still, you’re also abolished from the risk that the managerial position brings. Now that you’ve finally made up your mind and decided to go your own way, you probably know that there are some obstacles on that path. Small business accounting is one of them. In the next few paragraphs, we’ll show you how to sort them out in the least stressful way.

1) Take the books by the binder

You know that old saying “take the bull by its horns”? Well, that’s exactly what you need to do with your small business accounting duties – take the books by the binder from day one and don’t postpone the accounting work.

Just like with everything else in business, the more you’re putting off your accounting tasks, the higher is the probability that you’re going to leave something out. As a result, you might not include all your transactions on your tax return. And coming into conflict with the tax authorities is not something a new business owner should do.

Therefore, categorize all your accounts payable and accounts receivable from the very first hour of your small business tenure. When you’re books are in order, you’ll have more time to concentrate on your core business tasks.

2) Don’t mix private and business finances

In line with the organizational tips from the previous paragraph, it’s vital for your small business accounting to set apart your private and business accounting.

First of all, if you’re a sole proprietor, like numerous SMB-owners in the US, you might be tempted to spend more your business money than you should. Therefore, it’s a must to open two separate accounts – one will be your SMB-account, which will be used for all the business-related transactions. The other one will be your personal account, where you’ll keep your personal money.

However, you need to know that as a sole proprietor you don’t pay yourself a salary. What you can do is write a check to your name and that way take cash out of your business account. Moreover, this is possible only when your business has made some “extra” money, i.e. the income has surpassed your monthly expenses – the rent, the overhead expenses, and the insurances.

At the beginning of your SMB-career, when your revenues are still low, you might not be able to withdraw any assets from your business account via checks.

Because of that, it’s important to know these things in advance, so as to save enough cash for everyday life in the first few months of your SMB-career.

3) Use an extra hand

Nobody can work completely on their own, especially if they’re rookies in the field of small business and accounting.

Therefore, if you notice from the beginning that accounting isn’t your kettle of fish, don’t hesitate to use an extra hand.

Since every cent is sacred for a new small business owner, you might not be able to hire a full-time accountant. The good news is that it’s not necessary for this day and age.

Namely, you can rely on a plethora of top-notch accounting software tools. They’ll help you track your expenses and expected payments, which are two crucial elements of every small business.

What’s more, most modern software solutions can help you schedule your due payments, as well as automate the invoicing process.

Also, inventory management is much simpler with accounting tools, as well as estimating your new projects.

To top it all off, most of these options are scalable, so you can choose a package of services you need at the moment and pay only for the desired period of time.

All these options can come in more than handy for a new small business owner who wants to tackle the accounting features in a swift and effective way.

4) Avoid multiple loans

As we’ve already mentioned, you’ll have peace of mind with your accounting if you don’t mess them up.

In line with that, taking an SMB-loan is a legitimate way to finance the commencement of your entrepreneurial career. Still, if you overdo with those loans, you’ll end up in a financial gutter from which you might not see the light of day.

Every loan you take is recorded in your business credit score. The greatest benefit of this official document is its transparency. So, if your credit score is negative and you ask for another loan, most banks will refuse to give you one.

Nevertheless, there are numerous private lenders that are willing to lend money to such businesses. While they also might check your credit score, it’s not their primary criterion. Unlike banks, which follow complex legal procedures, law-wise, private lenders tend to perform these operations faster.

On the one hand, it’s great for a business owner in trouble, since they’ll get the money they need more quickly.

On the other, those lenders usually don’t hesitate to engage their legal mechanisms in case a business owner can’t return the borrowed money on time.

For all these reasons, measure it twice and cut only once when you’re considering taking a private loan for your small business. It might improve your financial condition for a while, but it could also lead you to an even more difficult situation.

In a nutshell – if you want to keep your accounting simple and efficient, don’t take multiple loans, especially not from private lenders.

5) Mind the taxes

There are two major end goals of every accounting task – keeping your finances under control and getting ready to file a complete tax return.

While not being able to reach the first goal will harm only the financial side of your business, messing up the latter could lead to the complete business demise.

The tax authorities are strict when it comes to accounting details, so leaving out any financial reports can take to severe penalties.

Because of that, think about consulting a registered tax preparer when you’re launching your business. This is also when that official and your accountant (if any) should have a conversation, as well. It will help you keep your books in order from the beginning and not omit a single financial detail on your tax return.


Dealing with accounting is a complex process for every business owner. However, that’s the essential legal aspect of the business, which is why accounting requires your full attention. The practices shown in this article will help you hold the reins of your financial books and run your business in the most efficient way. That way, you’ll always know what assets you can count on for your future business quests, as well as what taxes you’ll have to pay for every taxation period.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
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