Of the many things that go into running a business, few can be more challenging or time-consuming than managing the accounting process. Thankfully, the introduction of new technology (alongside some key best practices) has made it easier than ever to optimize business accounting.
Regardless of whether you run a small startup or a larger corporation, the following tools and tips are some of the best ways to optimize your business accounting process:
Automate Sales Tax Compliance
Staying on top of sales tax compliance is one of the biggest accounting challenges a business may face. Sales taxes are subject to changing rates, exemptions, holidays, and more. To further complicate matters, filing deadlines and reporting requirements can be confusing, requiring frequent attention — especially if you have an online business that conducts sales in multiple tax jurisdictions.
The introduction of sales tax compliance software has been a major benefit for companies large and small. This software calculates accurate rates for every jurisdiction in the United States, applying appropriate sales tax rules to each product and service. Better yet, this software automates the filing process by tracking data and then filing and remitting the returns on your behalf.
Not only does the use of sales tax compliance software help you save countless hours, it also ensures that your returns are accurate and compliant with current regulations. By integrating sales tax software with your current ERP, you can eliminate one of the greatest challenges to your business accounting process.
Set Up Separate Business Checking Accounts & Credit Cards
While this typically isn’t a problem for larger corporations, many startups overlook the importance of using separate business-related checking accounts and credit cards. As with sales tax compliance software, this simple step can go a long way in simplifying your accounting processes.
First and foremost, these business accounts allow you to separate your personal and business expenses. This helps you track the costs of running your business with greater accuracy, which could help you identify areas where you can cut costs. When it comes time to file your own taxes, having separate accounts will also help you save time by eliminating the burden of sifting through your personal account data.
Many business owners are able to open a business account at the same location where they do their personal banking. Be sure to ask your bank what type of business account services they provide so you can make the most of your company’s account.
Always Keep Backups
It should go without saying in the digital age, but keeping backups of all important financial information — from sales tax data to workplace expenses — is absolutely essential to ensure that unforeseen circumstances don’t derail your business accounting process.
While it’s true that cloud software allows for secure online storage of your data, you should be prepared for technical difficulties that prevent you from accessing this information. By routinely backing up your financial data, you will be prepared should outages or other issues occur.
This also applies to legal documents and supporting financial documents related to your business. Permits, licenses, invoices, payrolls, and more should be stored in a secure physical location and backed up online so that you won’t have to worry about losing documents with legal significance during the times you need them most. Even more importantly, keeping these documents organized as part of an efficient record-keeping system will eliminate costly mistakes.
By implementing the latest software, separating your business and personal accounts, and maintaining an organized workplace, you can streamline your business accounting processes so your team will operate in a more cost-efficient manner. By saving time on your accounting needs and avoiding financial regulatory issues, businesses big and small can benefit from these basic practices.