7 Bookkeeping Tips Every Small Business Should Know: Did you know that only 33% of small businesses hire someone to do their bookkeeping? In the early days of your business, you need time to follow leads and build your reputation. Bookkeeping can cut into that time, meaning you need to know how to do it quickly and properly.
If you are still doing your own bookkeeping then we can help. Read on as we discuss the bookkeeping tips you must know.
1. Separate Business and Personal Finances
You should start from day one by separating your personal and business finances. Failing to do this can cause untold problems when it comes to tax time. You would be left looking through a long list of outgoings, trying to determine which was personal and which was for business.
To limit this crossover, have a business account and personal bank account. Use the necessary cards for each one. If you are forced to make purchases on business credit cards, then make a note of it in your bookkeeping tools and keep the receipt.
One other danger of mixing accounts is that you may end up with a shareholder account that is too high. You may have to claim all the additional income all in one go.
With so many small business bookkeeping software packages on offer, it has never been as easy to automate your finances. You can process transactions, create reports and generate invoices quickly and easily. Even if you have an accountant, you can still choose the system that you want to use.
Cloud-based accounting is one of the best solutions. Your financial information can be accessed from wherever you are working. It also has extra layers of security and access to backups that you may not have if your own systems go down or are compromised.
3. Keep Records
Receipts, business invoices, and expenses all need recording. If not, the financial history of your business can suffer. This may cause problems when filing taxes or applying for credit.
If you decide to keep physical records, then make sure you have a locked filing cabinet for them. They should have an easy-to-understand filing system for quick retrieval.
If you decide to keep digital versions, then make sure you have devices or cloud storage for them. Invest in a scanner so you can transfer physical documents to digital ones for storage.
No matter how small an expense is, you should keep it and document it. You should download your banking statements monthly and keep them on record as well. Make sure your accountant has access so they can view your cash flow in real-time.
4. Track Business Expenses
Your expenses could include insurance, supplies, inventory, and utilities. All of these need to be thoroughly tracked.
There will be times when large, unforeseen expenses arise. By keeping track of these routine, reoccurring costs, you will be able to plan and prepare for the larger ones. This will stop you from being caught off-guard when they do occur.
5. Make Time for Weekly Bookkeeping
While monthly reviews are fine, you should make weekly scheduling for administrative tasks. It usually helps to do it on Monday morning at the start of the week. That way, you can review balances, pay bills, update financial software and plan the week ahead.
Having it weekly will also break up the workload, which can be huge if left until the end of the month. With more regularity, you will begin to feel more in control of your business.
6. Start to Save
Just as it is important to save for emergencies in your personal finances, it is also important to save for business emergencies. Luckily, the savings do not have to be extensive.
In fact, they should scale up as your business grows. Work out what the biggest expenditure could be that might appear on the horizon, and always make sure you have that amount put away. If the business grows and so does the expenditure, then the savings should grow with it.
Another tactic is to work out how much you would need to keep going over a month or two without any income. By putting this away, you are safeguarding yourself against times when business is slow. All of this cash can keep employees paid, keep suppliers happy and allow you to grow in the inevitable downtimes.
7. Get the Right Help
Accounting and bookkeeping services for small businesses are never as much as people think. In addition, they are often worth their cost just for the time it will save you. This can be spent on more important tasks such as tracking down leads and growing your business.
Having a professional to do the job also helps avoid mistakes. They can increase efficiency regarding money management. In addition, they can often offer sound financial advice to help you out.
Most importantly, the knowledge of an accountant can save you money. They will know the best time to pay invoices and have ideas on when you can save money on payment terms and conditions. One of the other reasons why you should outsource bookkeeping services is that you do not have to hire someone in-house and do the payment and admin associated with another employee.
Get Organized With Your Bookkeeping Tips
In summary, all of these bookkeeping tips are about staying organized. If you hire someone to do it for you or go alone, you still need to stay on top of records. If not, mistakes could be costly.
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