How to Keep Track of Money in a Small Business

How to Keep Track of Money in a Small Business. Starting a small business is a big financial responsibility. It is vital to keep track of the money associated with your small business. Keeping organized records of all of your finances will make it easier to file your taxes, prepare profit and loss statements and determine your available funds.

Set up a filing system. Make one folder for recurring expenses, such as insurance and rent payments, another folder for other expenses, such as supplies, and a folder for income. As your business grows, you may need more files. You can add these as you see fit.

Open a business bank account. Have all money associated with your business go through this account so you can track it. This step may also make it easier to secure a business loan because the bank will have a record of your business finances.

Get receipts for everything you purchase for your business. If you are purchasing both business items and personal items from the same store, purchase the business items in one transaction and your personal items in another. This will yield separate receipts.

Keep a thorough paper ledger. On this ledger, write your daily income and expenses and your current business account balance. Make sure you record all receipts in your ledger. You can draw columns on a piece of notebook paper to make a simple ledger, or purchase ledger paper at an office supply store.

Check your ledger against your bank account statement when you get it. Make sure they match. If you see any discrepancies, find the problem and correct it immediately.

Input your cash flow into a basic accounting software program. Once your business grows, this will make it easier for you to track your finances quickly.

Hire an accountant once you can no longer keep up with your finances. An accountant can help you with your taxes and pay bills for you when your business grows to the point where this becomes difficult. In addition, she can prepare detailed reports for you. If you have employees, an accountant can handle the income tax for the paychecks and other necessary payments, such as insurance.

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