Managing your business’s finances is a task with high stakes and little forgiveness. It can get complicated and stressful quickly–especially with employees depending on you. That said, account management has been a foundational element of any successful business for a long, long time and there are several agreed-upon best practices in accounting.

We’ll be looking at some of the best accounting practices and discussing why they might work for businesses of all shapes and sizes.

7 Accounting Best Practices to Consider 

1. Separate personal finances from business finances.

Small business owners usually handle a large amount of the purchases they make on their own. To reduce confusion–and the errors caused by confusion–business owners should be diligent about keeping their personal and business finances completely separate. This means separate bank accounts, credit cards, and a focus on account organization that allows a 360-degree view of their finances to ensure nothing crosses over.

2. Develop internal controls

There is always the possibility of fraud when you own and operate a business. Building controls into your operations can help decrease the opportunity for fraud. Make sure that your workflows separate your accounting tasks between a variety of your employees and/or account management software so no one has a disproportionate ability, or opportunity, to commit fraud or make errors that can’t be caught by another control later down the line.

3. Use account management software to stay organized

Using account management software is one of the best accounting practices for small businesses. There are a million different things a small business owner needs to keep track of to maintain healthy finances and financial outlooks, and by using software like Quickbooks or Intuit, or Plastiq to manage your accounts, you’ll never lose sight or track of your most important financial data.

4. Pick your accounting method.

There are two main methods of accounting for any business: cash accounting and accrual accounting. Cash accounting means you only record your gains and losses when cash is received or paid; accrual accounting only takes revenue into account when the goods or service has been delivered. Every business model needs to decide, based on its specific accounting needs, which method works best for them. Regardless of what they choose though, deciding on a method is extremely important.

5. Keep an eye on your cash flow.

A healthy cash flow is as important as anything to a small business. To make sure that your cash flow is staying healthy, and that it will continue to do so in the future, every small business needs an extensive understanding of where their cash flow is and where it might be going. There are many account management software products that provide 360-degree visibility over every payment going in or out of your accounts as well as providing the opportunity for analysis and prediction based on that data.

6. Outsource your payroll processing.

Payroll processing is a complicated, multi-step process that needs to be completed perfectly or has the potential to cause major issues to any business. With that in mind, outsourcing your payroll to one of the many companies that specialize in processing payroll is a huge factor in removing unwanted stress and unnecessary, often time costly, errors. A few of these companies are:

• ADP
• Gusto
• Quickbooks
• OnPay

7. Plan for the future.

Keeping an eye on your cash flow means knowing what’s coming down the pipe for your business. This means planning for upcoming taxes, future expenses like inventory and payroll, and staying organized in terms of your accounts receivable and accounts payable. Maintaining a tidy financial department and, in turn, a tidy financial outlook allows you the foresight to not only plan for what you know is coming but to be prepared for those bumps along the road you aren’t expecting.

Running a business is a challenging endeavour and maintaining a strong accounting practice is as hard as it gets. There are many, many business account best practices and we hope this small selection of them will help guide you in your journey to create an amazing accounting practice.