What Accounting Practices Are Helpful for a Business Owner?

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Accounting PracticesYou don’t need a degree in accounting to run your own business, but there are some accounting practices that are helpful for a business owner, according to Forbes. You don’t need to be able to do your own taxes, for example, but you do need to keep track of your expenditures and other records so you can hand them to your accountant when tax time comes. Here are a few tips to help business owners navigate the financial aspects of operations without getting bogged down in the details.

Open a Business Checking Account

Business owners need to keep business funds separate from their household budgets. The best way to do this is by opening a business checking account that is not connected in any way to your personal funds. If all money for the business goes in and out through this account, you will easily be able to review the financial health of your business. Also, expenditures will be much easier to calculate come tax time.

Keep Track of Your Mileage

Many small business owners put a lot of business-related miles on their personal vehicles each year. That mileage is tax-deductible only if you keep track of it. The best way to keep track of mileage is by writing it into a log book that you keep in your car along with a pencil. If your car has a trip mechanism for the odometer, you can trip it every time you head out on a business-related journey and record the mileage at the end of the drive. In the log book, which can be a simple spiral notebook, make sure you put the date and the reason for the miles logged along with the mileage.

If you have difficulty remembering to log miles in a notebook, you can use your business calendar and Google maps to calculate your mileage. Make sure every trip you take is properly recorded in your calendar. At the end of the year, enter each trip into Google Maps or a similar application in order to calculate the total mileage. Each trip needs to be recorded separately for tax purposes.

Get a Business Credit Card

Rather than using petty cash for expenses, get a business credit card. You don’t need to go into debt to do this. Simply use the card to keep track of expenses and pay off the balance each month using your business checking account. When you pay for expenses using one credit card and one business checking account, you don’t need to hang onto receipts. When tax time comes, all you need to do is print out the statements for the year and bring them to your tax preparation appointment.

Related Resource: Incorporating Technology Into a Small Business

Keeping track of expenses, inventory and income can be difficult for business owners. However, if you take these simple tips for staying organized, you’ll be able to keep track of your business finances easily. Use these accounting practices that are helpful for a business owner, and then leave the rest of the accounting work to the professionals at tax time.

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