Top Ten Do's and Don'ts in Business Accounting

Do's

1. Learn basic accounting before you go into business. Go to school if necessary.
2. Consult and retain an accountant familiar with your industry before you start.
3. Determine what accounting software program works best for your business.
4. In the beginning, do your own bookkeeping to gain knowledge of your accounting.
5. Set up inventory policy and internal controls including safeguards against dishonesty.
6. Reconcile your bank account at least once a month when your bank statement is received.
7. Maintain and update your cash flow control spreadsheet monthly.
8. Plan to outsource your payroll and payroll reporting to a payroll service provider.
9. Prepare financial statements at least monthly.
10. Keep your business records separate from your personal records.

Don'ts

1. Delegate the authority to sign checks to anyone.
2. Use money withheld for payroll taxes or sales taxes for other purposes.
3. Commingle personal assets with your business assets.
4. Delegate cash flow projections--your lifeline to liquidity.
5. Be optimistic in sales projections or conservative in expense projections.
6. Rely on verbal agreements on any important matter including purchases.
7. Pay an invoice without matching it to your purchase order.
8. Delegate your relationship with your lending sources.
9. Wait to establish credit sources until you have a need for financing.