Seven Essential Small Business Accounting Tips

Let’s demystify small business accounting by exploring strategies to streamline financial operations. These essential accounting tips aren’t just for record-keeping; they are pivotal to the financial health of your business.

1. Separate business and personal finances with a business bank account.

Some small business owners walk the line between personal and business finances. However, maintaining a clear distinction between business and personal expenses is critical for accurate accounting, and it shields personal assets from liability. Here are some tips to ensure separation:

  • Open a business checking account. Dedicated personal and business accounts help you track business expenses and strengthen your company’s creditworthiness. A small business checking account is necessary to keep up with tax payments and other cash transfers.
  • Use a business credit card. This simplifies accounting and prevents the mixing of personal funds and business expenses.
  • Avoid using business funds for personal expenses. Keep personal and business expenses separate to simplify bookkeeping and tax reporting.
  • Regularly transfer earnings. Move a set amount from your business account to your personal account regularly, treating it as a salary. This allows you to manage personal finances without dipping into business funds.

2. Master your cash flow management.

Any small business owner knows the value of cash flow. Here are key strategies to transform cash flow management from an isolated function to an integrated tool for strategic planning.

  • Monitor incoming and outgoing funds. Regularly review your business checking and credit accounts to track expenses and income. Choose a date and time each month. Include all employees and stakeholders. Make it clear that these reviews are sacrosanct. No absences. No exceptions.
  • Keep track of invoices and receivables. Issue sales invoices promptly and follow up on overdue payments. The only way to keep invoices and receivables in order is to assign the responsibility to a team member. Incorporate project management tools to ensure completion.
  • Pay bills on time but take advantage of any payment terms to maintain a healthy cash balance. Consider paying early if it offers benefits like discounts.
  • Leverage bookkeeping software for forecasting. This allows you to make informed decisions about major investments and their immediate and future effect on your cash flow.

Effectively managing cash flow bolsters your business’s liquidity against unexpected expenses; it also provides the means to fund lucrative growth opportunities immediately— to strike while the iron’s hot.

3. Regularly review your finances.

I highly recommend that you regularly review your business’s finances. This is an essential accounting tip. It’s also common sense.

Set aside time each month to review and analyze your financial statements to examine your balance sheet, income statement, and cash flow records to ensure it reconciles with the statements on your bank accounts. These reviews can identify areas for improvement and help in making strategic decisions.

4. Choose the right accounting software.

Opt for a cloud-based accounting system that targets your business needs. It can automate many bookkeeping tasks like invoicing, bill payments, and payroll processing, and the latest features help you stay compliant with current tax rules and accounting methods.

5. Track business expenses and tax deductions.

Keep a meticulous record of business expenses and your eligible deductions. Approaching your purchases and record-keeping with the right approach can reduce your tax liability.

Know what types of expenses you can deduct. Office supplies, travel costs, and even insurance may be eligible for deduction.

before making decisions about major purchases and business expansion, consider the tax implications. This can involve timing these expenses to maximize tax benefits.

6. Plan for business growth with intelligent forecasting.

Strategic financial planning is key to maintaining your company’s financial health. Use your financial data to create sales, expenses, and cash flow forecasts. These records can be useful if you decide to explore options like bank financing or investor funding.

Remember SMART goals? It’s an acronym for specific, measurable, achievable, relevant, and time-bound goals. Whether it’s increasing revenue, expanding your customer base, or launching new products, articulating your goals clearly is essential to success.

7. Seek advice from a financial professional.

Even when you take the time to learn business strategy yourself, the details change year to year and are hard to keep up with. While these essential accounting tips for small businesses will set you up for success, a tax professional can provide invaluable insights on federal taxes, strategic tax planning, and business structuring.

Schedule a consultation today, and let’s keep your business compliant, sustainable, and profitable.

Talk soon,
Jeremy A. Johnson, CPA


  1. “Publication 535 (2022), Business Expenses | Internal Revenue Service,” IRS.gov, Feb. 13, 2023. https://www.irs.gov/publications/p535#en_US_2022_publink1000208607 (accessed Jan. 16, 2024).
Meet the Author

Jeremy A. Johnson is a Fort Worth CPA who combines strategic tax planning, accounting, CFO services, and business advisory services into a single, end-to-end solution for growth-stage businesses.

Jeremy writes for small business owners who need actionable information on tax strategy, efficient accounting practices, and plans for long-term growth.

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