Practical Guide to Accounting for Small Business

In those crucial first few weeks, months and years of a small business, success is much more obtainable if you’re tracking the way money is flowing in, through and out of the organization. With 29% of early-stage companies failing because they run out of cash, accounting for small business can buy CEOs time to build stronger companies.

Accounting is a method of recordkeeping and financial tracking that enables business owners to monitor assets, liabilities, revenue, income and cash flow. As “the language of business,” accounting helps owners and managers monitor the overall financial health of the organization and inform important decisions. 

Accounting for small business is important because young companies tend to have tighter budgets and limited cash reserves. Without proper revenue and expense management, owners are operating with blinders that impact their ability to see the whole picture. The more transparency business owners have about company finances, the better decisions they’ll make about day-to-day operations and development. 

So, here are some practical tips to help you get started: 

Record and reconcile all transactions 

The first step to accounting for small business is making sure that all of the information is being tracked and recorded. Make sure that every transaction is being written down and reconciled so that you can be 100% sure the ledger is accurate.

To do this, try:

• Analyzing all transactions in the ledger to make sure nothing is missing

• Gathering supporting documents, such as bank statements and receipts

• Comparing receipts to bank accounts to make sure the ledger is balanced

• Solving any discrepancies you identify 

Manage your cash flow 

According to US Bank, cash flow is blamed 82% of the time when young companies fail for financial reasons. Strong cash flow management is a key pillar of accounting for small business because it enables owners to be on top of the money flowing in and out of the organization and make more reliable predictions about revenue and expenses.

Try creating predictability by:

• Scheduling and spacing out bill payments

• Exploring flexible payment plans

• Making sure your receivables are arriving on time

Use accounting software

Accounting software, such as QuickBooks, provide organization. Technology enables business owners to streamline their accounting processes by:

• Communicating with third-party financial software

• Automating billing, receivables, and accounting 

Accounting for small business is supported by software such as Bill.com and Expensify that make tracking for things such as travel expenses and production costs easier. A software such as Sage Intacct then slices and dices data in real time to empower decisions and plans. 

Software unlocks in-depth analyses of a company’s lifeblood so that owners and managers can make informed decisions and take calculated risks.  

Present complete and accurate books 

By taking time to make sure the ledger is accurate, business owners will be able to provide complete financial records to their tax accountants. This will help guide decisions that can lead to cost savings and healthier margins. Over time, higher-level financial visionaries, such as Fractional CFOs and Controllers, can begin to mesh this data with broader business plans to unearth new areas of growth. 

As your business grows, start delegating

Unfortunately for many business owners, accounting is not second nature and can even feel like a distraction. Some people may feel overwhelmed managing the variety of tasks required for small business accounting. 

Luckily, companies can outsource accounting tasks to experts. With outsourced accounting services, business owners can delegate accounting tasks, such as:

• Budgeting

• Billing automation

• Financial reporting

With a person actively managing cash flow and running numbers through analytical software, owners and managers can refocus on their core tasks and work alongside accountants to secure the organization’s continued growth.

Once companies expand and are able to reinvest, CEOs can eventually begin to delegate higher-level financial strategy roles as well. With Fractional CFO services, owners access C-level partners with a range of backgrounds and expertise on a part-time basis. 

By working with an outsourced accounting firm, which hires accounting professionals full time, business owners can access a breadth of financial talent at their fingertips to aid in short- and long-term company goals. 

Outsourcing accounting services with the A Team

By hiring financial professionals on an as-needed basis through an outsourcing company like the A Team, owners save time and money. Accounting for small business becomes a tool for propulsion, rather than a time-consuming distraction. 

The A Team’s Fractional CFO services give owners the information they need to make critical business at a fraction of the cost of hiring accountants and CFOs full time. Our dynamic team of financial experts provide owners access to talent with ever-expanding skills to unlock new opportunities for companies to thrive. Our professionals will improve your company’s financial health and steer it toward longevity and success.