10 Dos and Donts for Small Business Practices

Working on your business -- not in your business -- can be a challenging task if you are unprepared. As a small business accounting firm, we have compiled a list, based on our knowledge and experience, of 10 practices that you should encourage, and 10 practices you should avoid.



Top 10 Do's



1. Learn the basic concepts of accounting, like the difference between a balance sheet, a profit and loss statement, and a cash flow statement.



2. Hire a small business accountant who is going to be familiar with your industry to manage the financial assets of your business.



3. Figure out what accounting and billing software programs work best for your business, and then use them.



4. Update your spreadsheets for cash flow control at least monthly, but preferably weekly.



5. Put in place internal controls to make sure the business receives all its income. It's best to get accounting advice to do it properly.



6. When you first start, your business is likely to be small; because of that, you can probably manage your own bookkeeping tasks. Do this if you can so that you can learn how bookkeeping works, and how to manage the finances of your business (even if you have to turn these tasks over to someone else later once your business grows).



7. Make sure you prepare financial statement at least once a month.



8. Reconcile your bank account immediately when your monthly bank statement is received.



9. Separate your business records from your personal records.



10. If you do payroll and payroll accounting, outsource these jobs to a professional provider of these services



Top 10 Don'ts



1. Don't overstate sales projections or underestimate your expenses; this could get you into trouble.



2. Don't wait to establish credit resources when you need financing. Instead, do it well in advance.



3. Don't combine personal and business assets.



4. Never delegate the authority to sign checks to anyone, not even your childhood best friend.



5. If you need to withhold money for sales tax, payroll tax, etc., DON'T touch it for anything else -- even in an emergency.



6. Never pay an invoice without matching it to your purchase order.



7. Don't delegate so that someone else does cash flow projections analysis; do them yourself.



8. Don't ignore the advice from your small business accountant and lawyer on important financial matters.



9. Don't rely on verbal agreements alone for anything important, and get everything in writing. (That includes any purchases, by the way.)



10. When you're establishing lending source relationships, don't delegate this job to anyone else and instead handle this job yourself.

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