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Accountancy 101: 5 Tips to Manage Your Small Business's Finances

Russell Smith
Russell Smith

Being your own business's accountant can be daunting, but it's possible with some tric

Being your own boss, running your own company, the American dream – it's not only a romantic notion, but also something that has wide-reaching benefits.

The allure of doing what you love and managing your own work life is something that draws in millions across the country. In the U.S. alone, there are nearly 28 million small businesses in operation. The majority of these are single-entity enterprises, consisting of only one entrepreneur running the entire operation. This means there are a lot of business owners out there doing everything themselves.

But, as with all good things in life, there are trade-offs. When it comes to running your own business, you have to take on a number of responsibilities that a traditional employee does not. One such responsibility is the management of your finances, a prospect that is enough to put anyone off the idea. Taking control of your business's money can be an intimidating prospect, especially for those who wouldn't class themselves as good with math. However, you don't have to leave your dream of owning a business at the door just yet.

For those who struggle to keep on top of their business's finances, or new business owners entering this exciting but complicated world, here are some expert tips to keep a firm and stable grasp on your business's financial health.

1. Take time to understand all of your financial responsibilities.

So you're running your own business. As such, you are responsible for managing your own money. But what exactly are your financial responsibilities? This completely depends on your circumstances, your business type and how large your company is. These are some common responsibilities:

  • Tax – Tax is a given, but what kind of tax? If you have employees, your responsibilities will differ from those of a single-entity enterprise. Do your research and find out what your tax obligations are.

  • Repayments and reports – You may have stakeholders to answer to and investors to repay. Likewise for banks and other lenders. These types of people or firms will also require financial reports and evidence of growth and profitability.

  • Day-to-day operations – Day-to-day responsibilities of running a business's financial accounts also require your attention. This includes bookkeeping and recording transactions, monitoring invoice payments, paying your own wages, dealing with suppliers, and budgeting.

Invest time in understanding the processes of each financial responsibility you have. You may have a few, or a lot, but be sure to be aware of each and every one. The result of such insight is that you won't miss important tasks, thus minimizing the potential for mistakes.

2. Make an accounting schedule. 

Any accountant will tell you that the key to good financial management is control. Losing control is when you start to miss things, when you start to make mistakes. So how do you maintain control? Keep things regimented and perform accounting tasks to a schedule.

Some might be tempted to do financial tasks as they come. Record transactions when they come in or send out invoice reminders when you remember. But this is a slippery slope. Something important comes up and you miss one item and you're left scrambling to catch up – or you forget about it completely and your figures get skewed.

The best advice we can give is to create a time slot. Once a day, week, month – whatever works. During this time, you go over all financial tasks that have accumulated with the given period. Record all transactions, file all invoices, and produce all necessary documentation. If you keep things on a clear and manageable pattern, you'll find it becomes a lot more difficult to become overwhelmed.

Financial accountants are like a wild animal – you just need to know how to tame them.

3. Use accounting software.

You're not an accountant, but that doesn't mean you can't use their tools of the trade.

Common practice for business owners running a small enterprise is to manage their financial accounts through basic spreadsheets like Excel, but this software isn't designed to support your accounting processes. There are plenty out there that do, though. You'll find countless examples of accounting software, such as Xero or QuickBooks, which have features to make your financial management easier. This includes scheduling and reminders, monitoring for capital gains, invoice procedures, separation of accounts between incomings and outgoings, and the ability to apply filters to your financial records to establish different kinds of data and reports.


Editor's Note: Looking for accounting software? We can help you choose the one that's right for you. Use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:


Establishing your financial data within specialized accounting software, instead of a basic spreadsheet system, might seem like it will overcomplicate things, but once you take the time to understand how the software works, it will make managing your business's money a whole lot easier.

4. Take onboard expert advice. 

No, this article isn't incredibly meta and self-referential, although it does make my point nicely.

Reading, listening and learning about how to manage your company's money better is only going to do one thing: help you manage your company's money better. Expert influence from those in the accounting field, or business owners who have been in your situation before and conquered that financial mountain, is worth the investment of your time.

There are countless resources available to help you learn how to be better at accounting. Articles will always pop up that provide new tidbits and insight into the world of money management and sound accounting practices. Often just reiterating some much-needed basics, but sometimes providing new techniques and education for SME owners on tools of the trade, this type of content is invaluable to a business owner who wants to improve on their accountancy skills. If you don't want to spend your life reading article after article about accounting, though, consider subscribing to podcasts or even attending talks and events.

It may take years of education and a handful of qualifications to become an accredited, professional accountant, but that doesn't mean you can't educate yourself to be your own mini-expert.

5. Know when to get help.

Stubbornness is, unfortunately, a trait many business owners share. It's a good trait to have in some circumstances. It helps you stick to your guns and build the vision you've always dreamed of, but stubbornness can also have its pitfalls. When facing issues with accountancy and finance management, it can be difficult to let go and not only get somebody else involved, but also admit defeat. However, sometimes is it simply necessary for company survival to bite the bullet and get support from a professional, such as a chartered accountant.

But when should you make that important call? Here are some examples of times where help is recommended:

  • You've lost control of your figures.

  • You are facing an audit.

  • You are losing too much time to account management.

  • You keep making mistakes.

  • You're simply out of your depth.

  • You are experiencing rapid growth.

Don't let your business sink because your money isn't being managed properly. Accountancy 101: you can't always be your own accountant.


Image Credit: moreimages/Shutterstock
Russell Smith
Russell Smith Member
My aim is to help our clients understand their numbers, change lives through financial education and build the best firm of chartered accountants in the UK. With close to 300 clients I enjoy working with a variety of different businesses and we have a real specialism within the creative and health sectors. Over the last 12 years I have been able to help the businesses we work with in every matter concerning their finances from multimillion pound deals to helping clients save hundreds of thousands of pounds in tax. Our whole business is shaped to ensure we give our clients the best advice, assistance and services possible - we’re not just here to do annual accounts and tax returns - what drives us is helping our clients to understand their numbers, achieve their business goals and ultimately – make more profit! I love working with people and have a fantastic team who help our clients get on top of their finances, cash and profits so there is more money left over for them and their families. We even have a Tax and Accountancy Emergency Helpline so our clients can reach us at any time 24/7 365 days a year and never lose sleep over their numbers again! If you'd like to arrange a free meeting with me to review your business you'll get: • A check on whether all your accounts and tax returns are up to date • A healthcheck on whether you are paying too much tax • A business review to see where you can increase your profits I also write a regular blog full of tax saving tips and advice on growing your profits and understanding your numbers. KNOW your numbers + TRACK your numbers = GROW your profits We love numbers!