When you start a small business, one of the first things you need to address is your bookkeeping process. You need a way to track the funds coming in and going out. Without a proper bookkeeping process, you will have difficulty managing your debt, expenses, and the collections of your receivables. Therefore, these are a few accounting tips for your small business.

Choose Your Bookkeeping Method Early

As an entrepreneur, you have probably taken on a lot of the work that will later be done by other departments. For example, you may be doing your own marketing and sales. You may even be doing your own bookkeeping. However, you should choose early what type of bookkeeping method you will use. Will you hire a bookkeeper, or will you adopt bookkeeping software? Also, will you have a CPA look over your financial records each quarter or year?

If you choose to hire a bookkeeper, you may not have to hire anyone full-time at first. You may even be able to hire a freelancer initially. This will save you money because you aren’t paying full-time wages and benefits. However, you may still require that your bookkeeper use a specific type of software for your company books.

Pursue Your Collections

Accounts receivables are assets on your balance sheet, but not collecting them in a timely manner can have a significantly negative impact on your finances. You cannot use these funds until they hit your bank account. Therefore, you can’t replace inventory, pay salaries, etc. if your receivables are not collected. If you are having difficulty collecting your payments from your customers, consider improving your invoices and adopting billing software that will automatically pursue your collections. Also, don’t be afraid to pick up the phone and call your customers.

Separate Your Funds

You should never mix your client payments and loan funds. You typically get a business loan for a specific purpose, such as startup expenses or marketing. These funds shouldn’t be used for anything they were not acquired for. Therefore, consider adopting software that separates your funding and income sources. You need to be aware of every dollar that has to be paid back.

Build a Detailed Budget

Not only should you have a detailed monthly budget, but you should know your weekly and daily expenses. This is especially important when you first start your company because tracking daily expenses will help you budget more accurately. These budgets can then be used to determine how much money you need to operate each day, week, month, and year. You will also be able to track your finances, particularly your expenses, much more accurately.

Ideally, your accounting process should be set up before you open your doors, but it should at least be in place during your first week of business.