Balancing your books is one of the more tedious tasks an Arizona small business owner has to manage each month. Keeping accurate records of your accounting information is crucial for completing your taxes and having an efficient documentation of transactions and payroll. By tracking how much you are spending each month, you can make more educated decisions in the future to increase your income and company growth. To get started, we recommend these 5 Arizona small business accounting tips to stay organized and productive:
1. Use the Right Accounting Methods
If you’ve just recently started your business and are figuring out the ins and outs of managing your finances, you’ll find that accounting software you use is very important. You can choose between cash basis and accrual basis accounting methods. Cash basis accounting is the method of recording transactions for revenue and expenses only when the physical payment for that transaction is received. The accrual basis of accounting method is when your business expenses are matched and reported when the expense occurs, not when the actual cash is paid. The difference between these two methods is that accrual accounting measures the profitability of your company during a specific time period better than cash basis accounting. But the cash basis method ensures that everything is accounted and paid for on time despite the information taking longer to record.
2. Keep A Daily Record
As an Arizona small business owner, this accounting tip is significant to do when you are first starting out. Especially if you aren’t using a payroll company or accounting software that assists you in keeping track of things. Keeping a daily record in a planner, an Excel spreadsheet, or even a Google docs sheet is a great way to log your company’s actions in case you need to reference something later on. This can include things like loans, revenue from sales, and bank deposits or withdrawals. Knowing when and why you made a transaction is crucial to keeping your financial activities straight. This may also help when you are getting ready to file a tax return and you are sorting through what was a business expense and what wasn’t. Such as company trips, lunches, or social events that you may otherwise forget about if you don’t keep a precise report. Keeping a daily record is a good habit to establish when learning how to manage your accounting correctly.
3. Verify Your Payroll Meets Local & Federal Regulations
As much as taxes and invoices are crucial to cover in accounting tips, payroll plays a big part too. There are actually many payroll laws based on your state that is easy to overlook if you are a new small business owner. You should check for law regulations regarding new hires, labor, child support, tax, and worker’s compensation. Forgetting to do so could lead to future legal disputes or penalties. Documenting an employee’s or independent contractor’s overtime, pay stubs, raises, or frequency of pay is all part of complying with local and federal payroll regulations. If you’re unsure of your ability to research these potential violations, working with a professional AZ payroll company is the best way to keep your business safe. They will assist you in running your finances through a checklist so you can operate legally and make sure you’re paying your workers fairly.
4. Learn How to Plan Ahead
The last of our small business accounting tips may seem obvious, but financial problems can sneak up on you any minute. If you learn how to plan ahead now by setting money aside or creating a “blanket” of savings to fall back on, you will be less impacted by having to make a sudden payment. This method is also convenient when it comes to not missing new business opportunities when you’re given the chance to improve your product, hire new talent, or collaborate with other companies. Furthermore, if you happen to have a slow month of business, your savings will help you stay on your feet. As an Arizona business owner, you should work ahead to avoid taking out any loans unless they are absolutely necessary.
5. Hire a Payroll Company
If the small business accounting tips and methods listed above sound too complicated, it may be wise to consider hiring a payroll company that has accounting and tax services included. Not only does this take the pressure off of you to make sure everything is accurately recorded and reported, but payroll companies also provide bookkeeping software that simplifies the process. This is more efficient than recording a ledger with pen and paper and it backs up all of your information in a digital format. By using a company that uses a secure accounting software, you can keep track of your invoices, transactions, business expenses, and much more. This way bills are less likely to go unpaid and your cash flow won’t be obstructed by missing payment deadlines.
How PayTech Can Help:
Don’t save speaking with an accountant until taxes are due, make sure to work with someone year long to make sure your finances are documented and updated all the time. Working with a company like PayTech helps minimize any inputted errors by providing multiple services for assisting you with accounting tips and taxes. We offer monthly statements of your revenue and expenses, year-round business and personal tax consultation, and tax return preparation. PayTech also provides year-end planning to maximize your tax savings so that you will have more to reinvest into your business for the following year. Work with professionals here at PayTech to make the process of keeping the finances of your small business in order.