If you’re looking to save money, a great way to do that is to get smarter about your accounting. So many businesses end up losing money due to accounting errors or not being aware of the right deductions and write-offs to make. The trick to better financial health isn’t just to make more money, but to be thoughtful and careful with the money you’ve already made. Establishing good accounting tricks and billing habits early on could end up paying off for your business for years to come.
At Hacker Accounting, we have years of experience working with businesses to help them run a tighter, smoother sailing ship. Here are seven accounting tricks for your small business that you need to know.
Control your tax liabilities
Towards the end of the year, take a hard look at your profits and loss. If your income turns out to be much higher than expected, make a few extra purchases before the year ends. This will help keep your tax liabilities low. Here’s an additional bonus. You can use after-Christmas sales as an opportunity to stock up on much-needed office equipment and supplies.
Related: Small Business Budgeting Tips
Consult an expert
No matter how financially savvy you are, if you want to keep your finances on the right track you should talk to an expert. Bring in a bookkeeper or accountant you trust to look over your books. They’ll be able to find you ways to save money, help cut down on needless expenditures and keep you from making any mistakes that could cost you come tax season.
The 30 day rule
Use your credit cards to pay your invoices when they’re due. This will give your business another thirty days of cash flow. Be sure to pay the balance of your card every month. Don’t treat these charges as a permanent loan.
Bill on time
Don’t put off your billing. You should be billing at least on a monthly basis. Putting off your billing is keeping your business from receiving cash flow, which will make it harder for you to fund any kind of expansion of your business.
Follow up on A/R invoices
When sending out an invoice, follow up with a call or email to see if the invoice was received. Often times invoices can get lost or aren’t entered into the accounting system for payment. By making the call, you confirm the invoice was received, you’re encouraging your client to pay the invoice and increasing the likelihood that they’ll pay on time and in full. If payment isn’t received on the due date, follow up by making a reminder phone call
Set longer A/P payment terms
Try to negotiate longer payment terms up front before making a purchase. While most bill pay periods can fall between 60-90 days, you should try to see if there’s any flexibility in the terms. If you can’t pay within your agreed-to terms, send a note to the vendors extending pay unilaterally by about 15 days and then pay within terms. Most companies will accept this compromise.
Get smart with your deductions
Another reason to speak with an expert is they can help you make deductions. The trick is not to push your luck. too many deductions on too many questionable things (personal expenses, leisure activities, etc.) can draw the attention of the IRS. But there are smart ways you can cut corners on your deductions. Case in point. if you want to reward your employees during the holidays, don’t get them gift cards. buy them turkeys or hams. You can deduct the cost of those food products and they won’t have to pay anything on them, whereas if you handed out gift cards it would be taxable for both you and your employees. There are dozens and dozens of little deduction accounting tricks like that that could save you a LOT of money in the long run.
Get More Accounting Tricks
The team at Hacker Accounting has been working with small businesses for many years providing financial needs and services. Find out what accounting tricks we use and learn what we can do for you business by giving us a call at 602-375-5251.