Small Business Accounting Tips: 5 Tips and Tricks for Business Owners in Nigeria

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Small business accounting tips shared in this post will help you run a better business

regardless of the scope, size or scale of your small business at the moment.

Since it is the dream of every entrepreneur to grow their businesses from one-man
venture into team of teams that handle various parts that make up the successful

One of the serious concerns that naturally comes with growth in small business is

Apart from keeping track of how you earn and spend money, there are various
dues as well as financial commitments to government and other organizations that will
require expert advice.  

While you can rely on these small business accounting tips to get your hands dirty with
accounting and bookkeeping, you could as well hire freelance accounting professionals
so you could concentrate on building the business of your dreams.

Why Small Business Needs Accounting?

These are some of the reasons a small business needs accounting:
  1. Creating and keeping consistent financial records.
  2. Paying taxes and legal dues on time and appropriately.
  3. Having a clear understanding of your cash flow.
  4. Making the best decisions on controlling overhead costs.
  5. Getting optimum value from all your expenses.

What Are Small Business Accounting Tips and Tricks?

1 Labeling and Tracking Activities.

Broadly speaking, you will have income and expenses to record in order to keep record of
how you earn and spend money. But, small business accounting will be more effective if
you can properly define and label all your financial activities.

For instance, Cost VS Expense

One of the small accounting tips I find really interesting  is differentiating cost from
expense. It may be confusing if you do not clarify what counts as cost versus what counts
as expense to you.

Cost is the monetary measure (cash) that has been given up in order to buy an
asset. An expense is a cost that has expired or been taken up by activities that
help generate revenue. -CFI.

So, going forward, know what is cost to you and what is expense for proper record

2 Accurately Recording Taxable Income.

Paying your taxes accurately can be tricky if you do small business accounting by yourself.
To avoid overpaying or underpaying taxes on your cash flow, you need to understand
which income is taxable or not.

Loans, revenue from sales and other cash infusions are easy to lose track of, but
you need to keep tabs on all your incoming cash flow. -Fundera.

Avoid legal troubles by tax authorities by recording your income accurately
and as at when due.

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3 Standardize Recording of Labor Costs.

Paying your team members and yourself happens every month and everyone expects
bank alert to hit their phones at certain period.

Apart from salaries, there are allowances, HMO fees, employment taxes and other
perks that may fall under labour cost for your small business.

If you’re tax savvy, you may be able to take on a DIY approach to paying your
employees. But given all the payroll mistakes you can make (and nasty fines
you can incur as a result), make sure you’re completely comfortable with
everything you need to do before you dive in. -Squareup.

In order to keep up with dynamic payroll tasks and taxes, you could create
a schedule or get a payroll system to ensure labour cost is accurately
calculated and funds are remitted promptly.

4 Separate Loans from Receivables.

One common mistake that these small business accounting tips aims
at helping you avoid is recording loan as receivables which may lead
to wrongly paying taxes you should not.

When you get financial help for marketing, expansion or to acquire
new equipment, most business owners wrongly these as receivables
which means they may end paying taxes on them.

To make sure the loans don’t appear in the receivables, use
software that separates income from borrowed funds. Don’t
lose sight of what is yours and what needs paying back.

5 Record Daily Expenses for Future Planning.

It may be difficult at the beginning, but over time you will
understand how to record and update daily expenses.

The importance of keeping track of daily expenses lies in the
fact you can know how much the company spends on a typical
business day. With this knowledge, you can better plan for a
year or two ahead.

Although, there is place for unforeseen circumstances when you plan for a
long time ahead. Knowing average cost of running your business on day to
day basis will help know what to invest in or stop spending on in order to
facilitate growth.

Remember, the more expenses you can verify, the lower your monthly-
and annual - business income, and the lower your business taxes.

Besides, record of daily expenses will give prospective investors
actionable insights about daily operations of your business, should
you need to raise funds in the future.

Have you learnt new small business tips and tricks you could
try today?
Small Business Accounting Tips: 5 Tips and Tricks for Business Owners in Nigeria Small Business Accounting Tips: 5 Tips and Tricks for Business Owners in Nigeria Reviewed by ObadeYemi on 7:50 pm Rating: 5

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