It is important to note that you should only record expenses pertaining directly to the small business in your accounting software. Examples of documents needed for expense management include invoices, canceled checks, purchase orders and other business documents. Open a dedicated business bank account to separate your business finances from your personal finances.
For example, if you receive cash, your accounting software would debit your cash account behind the scenes. Failure to follow this concept can make your online bookkeeping much more difficult and even land you in legal trouble if you’re a corporation or limited liability company. In those cases, you can preserve limited liability protections only by separating business and personal finances. Of course, the accountant or auditor is free to come to a different conclusion if there’s evidence that the business can’t pay back its loan or meet other obligations. In that case, the company might need to start considering the liquidation value of assets. The “going concern” accounting principle says you should assume that your business is in good financial condition and will remain in operation for the foreseeable future.
Process or review payroll and approve tax payments
Though it has a dated interface, doesn’t have a mobile app, and requires you to install the software on a desktop or laptop computer, Sage 50 Accounting is still a powerful piece of software. Software programs, apps, and tools can save your business time and potentially money if you’re able to ensure more accurate accounting. Using a software program can also eliminate the need to retain a full-time accountant, which can add to your business expenses. If you’re already using an accounting business accounting software program for small businesses, you may be able to generate these statements automatically using the expense and income information you’ve already entered. Neat offers document management specifically tailored for those who want an organized and streamlined method without the complications of traditional software. With its capability to store unlimited files, coupled with data capture verified by humans, it ensures accuracy and organization are at the forefront.
- If you set up your finances with accrual-basis accounting, you’ll record financial transactions when they occur, not when the money moves accounts.
- We don’t recommend Xero for sole proprietors or freelancers, even though it has a starter pricing level that would suit those budgets.
- If you have less than $50,000 per year in revenue, you can sign up for the Zoho Books Free plan.
- What’s more, if there are mistakes in your financial reports, you run the risk of misreporting your income.
- When you stay on top of your bookkeeping and accounting processes, you empower yourself to make wise financial decisions.
- If you’re asking yourself these questions, it’s time to start working with a professional.
Let’s say you’re a self-employed surfing instructor who bills clients for surfing lessons. Financial statements can tell you what your most profitable months are, how much money you’ve spent on supplies, and what the total value of your business is. QuickBooks uses advanced, industry-recognised security safeguards to keep all your financial data protected.