This article is centered on Basic Accounting Tasks for Small Business Owners & Freelancers. Accounting can be confusing especially if you don’t know how to go about it. Well, for a small business or freelancer, you don’t need to know everything about accounting before you can carry out simple or basic accounting activities. We have outlined some of the basic accounting tasks in this article that small businesses and freelancers will find helpful. Ensure you read through the article to the end to learn all you can.
Basic Accounting Tasks for Small Business Owners & Freelancers
The truth is owning a business requires your utmost attention and resources. As a small business owner or freelancer who is just starting out, you may not yet have the financial strength to hire a book keeper to carry out accounting tasks for you at first, you may probably do in the future when the business expands, that is why you need to acquaint yourself with and learn some basic accounting task that will let you work on those huge pile of receipts, transaction documents and bank statements that need to be sorted out.
Below is a highlight of Basic Accounting Tasks for Small Business Owners & Freelancers should be doing every week.
- Check Cash-flow Position Weekly.
- Send out an invoice as soon as possible
- Record all expenses and transactions
- Balance your checkbook
- Timely preparation and filing of taxes
§ 1. Check Cash-flow Position Weekly.
Cash is an important element as far as the financial management of a growing business which brings us to the first Basic Accounting Tasks for Small Business Owners & Freelancers. It is important that you understand the cash flow statement and analysis. A cash flow report or statement is a listing of the flows of cash in and out of the business. A cash flow statement can be as simple as a one-page analysis or may include several schedules that provide information into a central statement. Basically, the cash flow statement shows you both your expenses and your income as well as the timing of the flow of cash.
We recommend and think it better to perform this task on a weekly basis instead of having to be under the stress of everyday cash flow analysis. Checking your cash-flow position weekly will allow for transactions to process. More so, knowing the position of your cash flow will provide you with a real-time look at how funds are coming in and going out of your business.
§ 2. Send out Invoice as soon as Possible
I don’t think it healthy to allow delays in your business except if it is out of your control. Another task we recommend for you is to send out invoices to your customer/client who patronizes you without wasting any time. truthfully, it is healthy to send your invoices as soon as possible because that is the best way to ensure you receive payment almost immediately.
Know that issuing an invoice comes before payment because an invoice is a request for payment of products or services received. that is the more reason you shouldn’t waste time before sending your invoice because it will have a negative effect on you. Also, you shouldn’t waste time because you are actually delaying your payment
If you linger to send out your invoice, your customer/client may have moved on to another project and responsibilities. Instead, make it a habit to send your request for payment when it is still fresh on the customer/client’s mind.
§ 3. Record all Expenses and Transactions
The third Basic Accounting Tasks for Small Business Owners & Freelancers that you need to be aware of is to record all expenses and transactions.
Performing this task will help you keep a track of your business performance. Small businesses and freelancers often find bookkeeping to be stressful and difficult to understand. Bookkeeping helps you record all daily business transactions to keep track of them and ensure that nothing is missing out. Bookkeeping gives you that snapshot of your business financials in time.
It is important that you perform this task daily to effectively capture all the necessary transactions, categorizing them, and reconciling bank statements.
Been a new business owner and a small business, you need to determine how to manage your
- You can choose to work with DIY software(s). You can also use an Excel spreadsheet.
- You can also opt for outsourced or part-time bookkeepers be it local or cloud-based.
- You can hire an in-house bookkeeper and/or accountant. That is after your business must have grown and expanded.
- 4. Balance your Checkbook
Balancing your checkbook means you’ve recorded all transactions either deposits made to your account and as well withdrawals. The essence of you balancing your checkbook is to have an idea of the exact money you have in your checking account at any given time.
As such, you need to make sure your cash business transaction entries are accurate each month and that you are working with the correct cash position. Also, balancing your checkbook makes it easier to discover and correct any blunders or oversights made either by you or by the bank in time to correct them. Normally, you should be receiving payment on invoices digitally (i.e., bank-to-bank transfer) but if you still receive payment checks, ensure you deposit them instantaneously.
Below are a few steps to consider when balancing your checkbook.
- Note down interest Earned
- Note down service charges
- Validate the deposit amount
- Match all check entries
- Look out for unresolved items from previous statements
- Verify other debits on the statement
- List all outstanding checks (mark items)
- Balance
Follow the above-simplified steps above to ensure you accurately balance your checkbook. Having understood the above step, it means you need to open a bank account which of course seems to be compulsory in this age. it is the bank statement sent to you every month from your bank that will be used for your checks and balances each month. Better still you can make use of an “Excel spreadsheet” to enter all inclusions (deposits) and subtractions (withdrawals) you’ve made.
- 5. Timely Preparation and Filing of Taxes
The final Basic Accounting Tasks for Small Business Owners & Freelancers on our list is the timely preparation and filing of taxes. This task cannot be taken likely that is if you want to be in the government good books. You know, there are two kinds of people when it is time to make tax payments, those who are excited to, and those who are not. In order not to fall in the category of the second group, make sure you prepare on time to file your tax payment.
The truth is that establishing a business (small, medium, or large scale) simply means that you acquire responsibility for making tax payments. It is an impediment as a small business owner to have a clue on how much tax you have to pay based on your annual revenue; also, you need to know the annual filing deadlines. Tax payment should not be trivialized and as such, it is not a bad thing to require the service of a professional accountant to get your tax sorted out, that is if you ever need one.
- Understand which business tax return you need to file
- Know your tax filing deadline
- Put your records together
- Check for tax deductions and credits
- Subtract estimated tax payments
- Decide whether you need a filing extension
- Explore and study other alternatives if you cannot pay your tax liability
- Meet and discuss with your accountant or book keeper
- You can now file your tax
Conclusion on Basic Accounting Tasks for Small Business Owners & Freelancers
With all that been said, we have concluded our discussion and I believe you have learned a thing or two basic accounting tasks that will help your business as a startup or freelancer. Owning a business especially when you are just starting out or if you are a freelancer means you might have to perform the task of all of the departments there involved in the business until the business expands and you are able to employ workers and conveniently pay them. And one of those duties you need to do yourself, for the time being, is to perform some basic accounting tasks which we have shown you the 5 basic tasks that will help you
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