10 things

Posted by Bruce Mc on Jul 27, 2010 in Accounting, Bookeeping, Information, Opinions | 0 comments

Below is a list of 10 practices that you should run-through, and 10 practices you should avoid. In an effort to get this information out to my readers, I have taken this list and edited it to where from my outlook as owner of a small business accounting firm with our knowledge and experience makes a better working sense. Working on your business can be a challenging task if you are unprepared.  Please keep in mind that I have edited this for my readers, my clients, and my own commercialism. 

10 things you should be doing 

1. Even if it’s likely you’re not going to be managing most of the financial aspects of your business, learn basic accounting concepts yourself, such as what a profit and loss statement is, what a balance sheet is, and what a cash flow statement is, just so that you’re in the know. As the owner, you need to know why and how things flow the way they do.
2. Hire a small business accountant who is going to be familiar with your industry to manage the financial assets of your business. If you are starting your own pluming business and your accountant doesn’t know how to turn a faucet on anything else about the plumbing industry, find one that does.
3. All Accountants will offer programs that can certainly help you do your job better, find out which ones work best for you, and then use them. Make an informed decision on the services you engage and the products you use.
4. Update cash flow control spreadsheets at least once a month, but preferably at least weekly.
5. You should have internal controls in place whereby you know that your business has received all of the income you have coming. If you don’t know how to do this yourself, hire someone who is a small business accounting professional to help you.
6. When you first start, your business, it is likely to be small; because of that, you can probably manage your own bookkeeping tasks (QuickBooks Pro and Premier Conveniently come in Download Versions and are Easily Upgradable. Buy Now and Save up to 20%!). (see number one in this list) Do this if you can so that you can learn how bookkeeping works, and how to manage the finances of your business (please note, as you grow, you may/will have to turn these tasks over to someone else later).
7. Prepare financial statements at monthly:
   1. Income statement
   2. Owner’s equity statement
   3. Balance sheet
   4. Statement of cash flows
8. Reconcile your bank account immediately when your monthly bank statement is received. Bank reconciliations are extremely important. Unfortunately, many small business owners do not realize this, because they do not even reconcile their own personal checking account. They just figure they can look on line for a balance and as long as there is money in the account, they are fine. The issue is, bank reconciliations are a must because they are the final way to be sure all entries are made into your books and that there are not any double entries.
9. Keep business and financial records separate, and don’t intermingle the two.
10. Outsource your payroll and payroll accounting to a payroll service provider. (On-line payroll service provider, this is a less expensive choice.) 

Top 10 “should not”

1. Don’t brag or over-inflate your numbers; be modest about your sales projections, and don’t underestimate what expenses are going to be.
2. Never put your personal and business assets together.
3. Don’t hand over control; make sure you retain the authority to assign all of your checks, and DON’T delegate this job to someone else.
4. Don’t touch money that’s been withheld for tax purposes like payroll or sales tax and use it for anything else — even if you’ve got an “emergency.”
5. Never pay an invoice without matching it to your purchase order.
6. Don’t have someone else do cash flow projections analysis for you.
7. Don’t hire a small business accountant and/or a lawyer to help you with financial matters, only to ignore their advice. They are trained and experience in what they do. Yes they make a mistake or two. You pay them good money; listen to what have to tell you.
8. Verbal agreements are fine, but get everything in writing, too — including purchases.
9. Never assign to others your relationship with your lending sources.
10. Don’t wait to establish credit resources when you need financing. Instead, do it well in advance.

Okay some good advice that has been around the internet awhile. Remember while you work in your business you will need to also work on your business.