September 29, 2023
Successfully running a small business hinges on many things: a solid product or service, effective marketing, and, of course, wrestling with the financial beast. Wait, don’t ghost us just yet! If that last one sent you running for the hills or retreating into a cave of financial shame, please stick around. We’re here to change the narrative around business finances and shed some light on the often murky waters of small business accounting.
Okay, I’ll confess – small business accounting can be intimidating. I practically have my accountant on speed dial at this point with all the questions that come up for me. But taking charge of your finances – and insourcing professional services to fill in the gaps you don’t understand – is so crucial for your financial health. In this post, we’re tapping into the wisdom of Keila, the genius behind Little Fish Accounting. She’s got a knack for making money talk feel like a chat with an old friend!
The Holy Grail: Good Bookkeeping
The secret to keeping your small business out of highly problematic, financially risky situations isn’t actually that juicy. It just comes down to…
Good bookkeeping.
To put it simply, bookkeeping is like organizing your financial closet. It’s all about recording, organizing, and categorizing financial transactions (emphasis on the CATEGORIZING part – more on that in a second, though.)
But savvy bookkeeping isn’t just about keeping tabs on money in and money out; it’s your best tool for making informed, data-backed business decisions. Think: hiring your next rockstar employee or building compensation packages that’ll keep your team around for the long haul.
So, back to categorizing expenses…
This is where the magic —or should I say, the money—happens. But one expense area that often gets overlooked or miscategorized is personnel related expenses. Sure, you’re on top of your game with base salary payments. But what about the more nuanced aspects of your team’s compensation, like vacation days, bonuses, benefits, commissions, or reimbursements? These aren’t just budgetary afterthoughts; they’re the puzzle pieces of financial compliance and rock-solid future planning, and they absolutely HAVE to be categorized correctly.
This is where the services of experts like Keila and her team at Little Fish Accounting come into play. Insourcing accounting services will help make sure you’re both staying compliant, but also getting the most out of your budget by making sure your spending is being reflected in the right place.
Keila can also help you with things like…
Navigating Questionable Expenses
Small business owners often wonder about the deductibility of certain expenses. I can’t be the only one who sheepishly had to ask my accountant if taking one of my employees to a Beyonce concert while she was in town for work is considered a business expense, right?? Expenses like this can blur the lines between personal and business spending. I mean, seeing Queen Bee live was definitely a team bonding experience…but we didn’t exactly chat business in between Single Ladies and Halo.
There are complexities and nuances of accounting rules that can influence the categorization of expenses – especially around things like team bonding events – and my best recommendation is to always consult with someone like Little Fish Accounting before the IRS starts asking you questions.
A Journey to Financial Success
Small business accounting isn’t just about logging into Quickbooks at the end of each month and confirming the expenses are categorized correctly based on how their AI model thinks you’re spending your money. It’s a path to financial success. By understanding the critical role of good bookkeeping, leveraging technology wisely, categorizing expenses accurately, and leaning on the expertise of professionals like Little Fish Accounting, you can lay the foundation for a financially healthy business.
Accounting is the language that tells your business’s financial story. Embrace it, and you’ll not only avoid financial pitfalls but also steer your small business toward prosperity and growth.
To learn more about small business accounting and learn more about Keila and Small Fish Accounting, tune into Accounting For Small Business Success with Little Fish Accounting on On The Up & Up.
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