10 Do's And Don'ts On Small Business Accounting Practice

 Working on your business -- not in your business -- can be a challenging task if you are unprepared. I partnered up with a small business accounting firm, and we have compiled a list, based on our knowledge and experience, of 10 practices that you should encourage, and 10 practices you should avoid.

TOP 10 DO'S

1. Learn the basic concepts of accounting, like the difference between a balance sheet, a profit and loss statement, and a cash flow statement.
2. Consult and retain a small business accountant firm familiar with your industry.
3. Establish what accounting and billing software program works best for your business.
4. Update your cash flow control spreadsheet at least monthly -- ideally weekly
5. Put in place internal controls to make sure the business receives all its income.  It’s best to get accounting advice to do it properly.
6. At the beginning, try not to outsource bookkeeping tasks in order to gain knowledge.
7. Prepare financial statements at least monthly.
8. Reconcile your bank account immediately when your monthly bank statement is received.
9. Separate your business records from your personal records.
10. Outsource your payroll and payroll accounting to a payroll service provider.

TOP 10 DON'TS

1. Never overestimate your sales projections or underestimate your expense projections.
2. Don’t wait to establish credit sources until you have a need for financing. Remember the old saying “ask for money when you don’t need it.”
3. Don’t commingle personal assets with your business assets.
4. Never delegate the authority to sign checks to anyone, not even your childhood best friend.
5. Don’t use money withheld for payroll taxes or sales taxes for other purposes.
6. Never pay an invoice without matching it to your purchase order.
7. Don’t delegate cash flow projections analysis.
8. Don’t ignore the advice from your small business accountant and lawyer on important financial matters.
9. Never rely on verbal agreements on any important matter, including purchases.
10. Never assign to others your relationship with your lending sources.