Running a small business is an all-encompassing enterprise. For business owners who manage their own accounting functions in addition to the day-to-day operation, an orderly system with a well-thought-out schedule is essential to keeping a company’s finances in order.
While big tasks like recording transactions are hard to overlook, others can slide off the radar when time is tight and business is booming. Here are five small business accounting tasks to add your must-do list, which means set that reminder and check it twice.
Document and File Receipts
Paperwork is time-consuming, but it’s essential to keep up with the daily influx of invoices, receipts and payments. Establish a system for filing receipts along with copies of invoices, payroll documents, and bank statements—either in hard copy or via accounting software—in order to track where the company’s money is coming and going and to have updated records when tax season rolls around.
File Tax Extensions on Time
It is difficult to miss personal and corporate tax filing deadlines—the whole country is buzzing with reminders when those March and April dates approach. But what if you filed an extension? Those new due dates often creep up without warning following summertime distractions. (For example, the extended due date for 2014 corporation, S-corporation, partnership, or estates/trusts tax returns is right around the corner: September 15, 2015.) Establish a timeline for final filings and set as many reminders as it takes to meet the deadline—why waste money on penalties after going through the trouble of securing the extension in the first place?
Review Inventory
Businesses need to periodically assess the status of their inventory and make adjustments to keep big sellers in stock and discount items that are moving slowly. Take the guesswork out of this process by conducting a monthly analysis and recording the numbers. Doing this regularly will provide a reliable snapshot of how products sell during certain times of the year and how that impacts the business’s financial health.
Make Quarterly Sales Tax Payments
There are many types of taxes a business may have to pay, depending on the state and industry. Business owners who operate in a state that requires sales tax should set reminders to review these amounts ahead of due dates and send in payments on time to avoid penalties. (A tax professional can advise you on which tax obligations apply to your situation.)
Forecast Cash Flow Needs
Any successful business depends on having sufficient cash on hand—every day. Each week, owners should take stock of how much cash the business has and will need in the upcoming period and record the information in a simple cash flow statement. This regular projection protects against an unexpected cash shortage during a month when many bills are due or purchases are slow.