How To Set Up Small Business Finances the First Time in 6 Easy Steps

“I Don’t Know How to Set Up Small Business Finances. What Should I Do?”

Launching a small business and officially becoming an entrepreneur is an exciting endeavor, but it can also get a bit stressful from time to time. If you’re like most small business owners, you probably feel like there is far too much to do and not nearly enough time. Getting your small business finances set up right can help you manage bookkeeping tasks and keep your finances on track without becoming overwhelmed.

6 Steps To Set Up Your Small Business Finances For The First Time

Step 1: Open business bank accounts.

It’s not unusual for new entrepreneurs, particularly sole proprietors, to use their personal bank accounts when they first launch their businesses. Unfortunately, this can be a recipe for disaster. It’s challenging at best to keep track of your business-related finances when they are combined with your personal finances.

Your first step toward better management of your small business finances is to open financial accounts specifically for your business—and only for your business. You will need a business checking account, savings account, debit card, and credit card. Spend some time shopping around for the best rates and pay attention to the bank’s fee structures. Use your business debit and credit cards for business transactions, rather than cash. This allows you to create clearer records of your transactions, and can make small business bookkeeping easier.

Step 2: Choose between cash and accrual accounting.

Your next step is to decide whether to go with the cash or accrual method of accounting. In a nutshell, the difference between these two methods lies in when revenue and expenses are recorded and reported to the IRS.

With the cash basis method, you’ll record revenue and expenses when you receive or pay out funds for those transactions.

With the accrual method, you’ll record revenue when it’s earned, not necessarily when cash is received. And you’ll record expenses when you receive the bill, not necessarily when you pay the bill.

Typically, small businesses use the cash method of accounting, and larger companies use the accrual method. If you’re unsure about which one is best for your business, a firm that offers outsourced accounting services – like Accounting Meister – can provide personalized guidance.

Step 3: Get QuickBooks® Online help to establish your new system.

You may have begun recording transactions for your business with a simple spreadsheet. However, it’s best not to wait too long before switching to comprehensive accounting and bookkeeping software. You’re likely to find that your problems keeping track of your finances will continue to grow unless you switch to a more efficient, streamlined system that offers bookkeeping and accounting-specific features.

QuickBooks® is one of the most popular accounting programs available. However, setting it up and learning how to use it can get complicated, particularly if you’ve never used it before. It’s best to talk to a Certified QuickBooks® ProAdvisor.

Step 4: Store and manage your receipts digitally.

If you do opt for QuickBooks®, you’ll be able to store and manage your receipts digitally. (Say goodbye to those messy shoeboxes full of receipts!) Digital receipts are far more convenient and manageable than paper versions. You’ll be able to digitally “attach” each receipt to the corresponding expense.

For greater convenience, connect your business bank accounts directly to your QuickBooks® software. It’s safe and secure, and your transactions will be automatically downloaded to your QuickBooks® and categorized appropriately. Then, all you’ll need to do is set aside a little time to review your transactions and ensure they are categorized correctly.

Step 5: Set aside time to manage your finances.

Speaking of setting aside some time to review transactions, it’s a good idea to establish a regular schedule for all of your finance-related tasks. Some entrepreneurs like to set aside a little time at the end of each day. Others prefer spending a bit more time on it once per week, while others prefer getting a whole month’s worth of tasks done at once. Whichever route you take, treat your bookkeeping sessions as you would any other important appointment. If you start missing sessions, it’s all too easy to fall behind.

Step 6: Outsource accounting and bookkeeping tasks.

As your business grows, you’re likely to find that you’re struggling to get all of your finance-related tasks done. You may also decide that you’re ready for an experienced accountant to review your books in order to streamline your processes and identify opportunities for growth. It’s time to begin exploring the opportunities that await you when you outsource accounting and bookkeeping tasks.

It’s easy for entrepreneurs to feel overwhelmed with their small business finances, but you can get back in the driver’s seat when you partner with Accounting Meister – a leading small business bookkeeping and accounting firm. We offer customizable levels of service and personalized assistance, including QuickBooks® Online help and tutorials. Contact us today to request a consultation with a Certified QuickBooks® ProAdvisor.

Avatar for Scott Meister, CPA

Scott Meister, CPA

I help small businesses, accountants, bookkeepers, office managers, and business owners with their accounting needs. I’ve used QuickBooks since 2002 and train folks on how to use it efficiently. I create high-quality video training tutorials for QuickBooks and post them on Certifications include: Certified Public Accountant (CPA) | Certified Bookkeeper (CB) | Advanced Certified ProAdvisor for QuickBooks Desktop | Advanced Certified ProAdvisor for QuickBooks Online | Certified ProAdvisor for QuickBooks Enterprise | Certified ProAdvisor for QuickBooks Point Of Sale