10 Common Accounting and Bookkeeping Task for Business Growth

Finance and accounts are an integral part of every business. But, the steps that every firm takes differ from others based on the industry, accounting team, business size, the complexity of the accounting system, and other factors. 

Despite their size, small business owners need an accurate financial record. For matters as such, small business accounting and bookkeeping tasks are crucial. 

This blog will list the ten best small business accounting and bookkeeping tasks for a company’s growth. But before that, let’s get started with the basics.

What is Business Accounting?

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Business accounting is acquiring and evaluating financial data on business activity, documenting transactions, and creating business financial statements.

Accounting for small businesses is significant for several reasons. Keeping track of your liabilities, assets, inventory, and other data can help you attract buyers, safeguard your property from theft, and discover new opportunities for expanding and developing your business. The primary responsibilities of small business accounting are bookkeeping, creating financial reports, and preparing and filing tax returns.

Moreover, accounting for small businesses allows you to manage finances better and make wise financial decisions for your organization.

What are the Business Accounting Basics?

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You must know some business accounting basics to ensure your business operations run well. Even though you may be an expert in sales or marketing, you should never underestimate the value of basic accounting. 

A small business owner needs a clear picture of financial statements to move the business forward. We have mentioned the crucial accounting terms and principles that will help you get started. 

Accounts Payable

It is the money that you owe to vendors and creditors. It is regarded as a liability because you legally need to make the payment.

Accounts Receivable

It is the money customers owe for purchasing goods or services. It is a creditable asset because it is the customers’ legal obligation to pay. 

Balance Sheet

A balance sheet is a financial record that provides a snapshot of the economic situation of your business after a given period. It includes your company’s assets, shareholder’s equity, and liabilities.

Assets

It includes everything your business owns that is valuable, including accounts receivables, inventory, business bank accounts, furniture, machinery, and real estate.

Cash Basis Accounting 

It is an accounting method where a system records sales as soon as a payment is received.

Accrual Basis

It is an accounting method where businesses record income and outgoing costs during a sale. 

Profit and Loss Statement

It is also known as an income statement. It reports expenses, earnings, and net profit for a specific time frame. 

Double Entry Bookkeeping

It is a bookkeeping task where small business accounting professionals create two entries for each transaction. The two equivalent sides must be equal, one listing the debits and the other the credits.

Liabilities

It is considered a financial obligation or debt to a business. It includes income taxes, accounts payable, loans, wages, and other accounts owed. 

How to do Accounting for Small Businesses?

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Accounting is integral to managing a business. You can begin keeping track of your company’s financial data once you have mastered business accounting basics. Small business accounting tracks all your organization’s revenue and costs and uses that data to forecast sales, create invoices, process payroll, and submit tax returns.

Even while accounting may not be your primary source of motivation, it is a necessary component of the job. You must execute accounting responsibilities daily, weekly, monthly, quarterly, and annually to ensure your business succeeds.

What is the Job of an Accountant for a Small Business?

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An accountant’s responsibilities include assisting companies by reducing the stress of managing finances. In addition, accountants can be of great help if you are unfamiliar with basic bookkeeping or your organization is expanding quickly. 

Accountants are in charge of planning and managing small organizations‘ cash flow functions.

Bookkeeping is one of the tasks that fall under the accountant’s responsibilities. Bookkeeping is necessary to monitor your company’s overall revenue, and how it compares to the expenses, you must incur monthly.

An accountant will take care of all year-end reports for a business and the various reports required for tax season. They may also put together a short financial summary for your company so you can make informed decisions.

Accountants will also help you obtain periodical cash flow analyses, which indicate your company’s cash flow at specific times and the amount available to evaluate how much money can be taken out or re-invested in the company through improvements or additions.

An accountant also provides you with a balance sheet. The balance sheet gives you a transparent picture of how your business and bank account are interfacing at a specific time. This sheet lists your assets and liabilities and can provide a simple summary of your company’s performance.

Additionally, an accountant can guide various issues, including whether a separate bank account is necessary, whether payroll procedures should be improved, ways to boost sales, maintain financial growth, stay in compliance with HMRC, analyze data, and a host of other issues.

What is a Business Accounting Task?

A business accounting task is a responsibility that helps manage business processes seamlessly for a company.

Let us take a look at the various accounting for small business tasks. 

Daily Accounting Tasks

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Every day, among the numerous accountant responsibilities, is the need to complete tasks related to recording financial transactions. 

Deposit All Payments

Customers’ payments, including cash and checks, must be deposited into the business bank account. To begin the transfer of money from the consumer, you need to enter all credit card transactions. The corporation gets a current picture of its available funds by doing this each day.

Enter and Pay Bills

Verify each incoming invoice and input it into the accounting program. Keep all receipts and necessary paperwork for tax purposes and as a reference in case, there are errors while balancing. The IRS advises writing checks for all business expenses, indicating the deposit’s origin on the slip, and retaining copies of all slips.

Weekly Accounting Tasks

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The bookkeeper must verify that all the figures add up and there is enough money in the bank to cover expenses at least once weekly. The weekly tasks are comparatively more involved and include financial data management, invoicing, and others.

File and Document Receipts 

Keep copies of all sent invoices, payments (cash, check, credit card statements, etc.) and cash receipts (including credit card, cheques, and cash deposits).

Start a sorted vendor file alphabetically for quick access. For example, make a file for bank statements sorted by month and a payroll file sorted by payroll date. In addition, many accounting software programs allow you to scan paper receipts in place of physical records.

Evaluate Projected Cash Flow 

Managing your cash flow is crucial, especially in the first year of operation. You may set aside enough money to pay your bills, staff, and suppliers by estimating how much cash you will need over the next few weeks and months. Additionally, you may decide how to spend your money in business with more excellent knowledge.

All you need is a clear statement outlining your current cash situation, expected future revenues, and projected cash payments for this time frame. It is known as a cash flow statement. 

Monthly Accounting Tasks

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More involved tasks happen around the month’s end. Some of them include the following:

Review or Process Payroll and Approve Tax Payments

Be sure to withhold, report, and deposit the applicable income tax, social security, health care, and disability taxes to the appropriate agencies on the required dates even though you have a set schedule for paying your employees, ensure to meet the payroll tax requirements based on federal, state, and local laws.

Before payments are distributed, review the payroll summary to prevent having to make adjustments during the following payroll month. All of this may be done by a payroll service provider for an affordable rate, saving you time and guaranteeing accuracy. 

Evaluate the Actual Profit Loss vs. Budget and vs. the Prior Period

You need to check the money you made and the amount you spent by looking at your profit and loss statement for the current month and the entire year. Then, compare it to your quarterly or monthly budget. You may go over or under budget by comparing your actual spending to your budgeted spending.

If you still need to create a budget, look for differences and make adjustments by comparing your current year-to-date P&L with the same prior period’s year-to-date income statement.

Quarterly Accounting Tasks 

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The quarterly accounting tasks primarily include managing a small business: tax estimates and quarterly payments.

Evaluate Quarterly Payroll Payments and Make Payments

 The IRS and most states demand quarterly payroll reports and pending quarterly payments. It is better if your payroll service provider completes and files these reports. It is your responsibility to ensure that payroll procedures and data look acceptable.

Create a Revised Annual P&L Estimate

It’s time to assess your financial situation, including how much money you make, your net assets’ direction (up or down), the difference between your income and outgoings, the reasons behind such changes, and how you spend profits. While doing so, you’ll spot problem areas and make corrections to boost sales and margins.

Annual Accounting Tasks

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It’s not just birthdays or anniversaries that come annually. It is also tax filing and inventory reviewing, among others! As a result, there are many time-intensive tasks at the end. 

Evaluate your Inventory 

Examine your current inventory and estimate the value of unsold items. Any stock you write down comes in a tax deduction at year’s end.

 Approve and Review Full-Year Tax Returns and Financial Reports

Before submitting your company’s full-year financial records to your accountant during tax season, you must study them closely. Check your return for accuracy based on your full-year financial reporting before you sign it. You will be responsible for paying additional taxes, penalties, and interest if the IRS audits your business and discovers any underpayment of taxes.

What are the Business Accounting Checklists for Success?

1.Update and refresh your financial information

Your accounting software should automatically sync your bank and credit card feeds and the sales information from your POS system. You’ll need to carry out this task manually if it doesn’t. This gives you a current view of your business finances and demonstrates how much money is coming into and out of your company.

It is imperative to carry out this daily task since it makes it simpler to identify inconsistencies with previous business transactions.

2.Match up the cash and the receipts

After each day, reconciling cash and receipts makes it easier to spot cash shortages or overages promptly, allowing you to track down where the money went and spot mistakes or theft.

3.Track budget variations

Budgeting for different costs, activities, and projects is simple, but staying within these budgets can take time and effort. Checking for such issues each month and taking corrective action is the greatest strategy to lower budget variations.

4.Create a data backup

Make sure to manually back up your financial data at least once a month if you need to utilize cloud-based accounting software that does it for you. Then, if a hardware malfunction or file corruption occurs, you may feel at ease knowing that you won’t lose your data.

One benefit of manually backing up your data is that you can return to a previous version if you accidentally erase something.

5.Prepare your financial statements for the year

It is crucial to evaluate the company’s annual financial performance and current financial health towards the end of the year. Making statements, such as the balance sheet, cash flow statement, and profit and loss statement reveals this.

These statements are created based on the records kept during the year, and the accuracy of those accounts determines its success.

For further planning and strategizing, taking stock of your company’s performance and health is imperative. So it is vital to ensure that the information you provide is accurate.

Final Words

When done manually, many bookkeeping procedures outlined are time-consuming and prone to error, but accounting software can automate them. For example, it can automatically generate financial statements, invoices, follow-up reminders, and payments to your suppliers. Accessing the data required for financial reporting of all kinds is also made simpler by an accounting system.

Small business accounting software provides real-time financial transparency, enabling better cash flow management and operational decision-making. Additionally, having software at tax time allows a company to precisely identify tax amounts to lower the taxable income rate, freeing up more money to invest in the company’s personnel and operations. So, ensure to get the best accounting software by comparing various options available from the market.