Bookkeeping Tips for Improving Your Small Business
Bookkeeping is commonly overlooked by small business owners. But by forcing yourself to take the time to get the books right, you’ll be more equipped to help your business in the future. Follow these bookkeeping tips to improve your small business.
Separate Personal and Business Finances
One of the most helpful bookkeeping tips for small business owners is to open a business-specific bank account that’s separate from your personal finances. It will help you keep track of cash flow and make it easier for reporting taxes. All you have to do is look at the bank statements and move on: no detangling of accounts required.
Once your business grows, you’ll have to separate the accounts anyways. Plus, by that point, you’ll be busier than ever. Separate the accounts now while it’s still small and manageable so you won’t have to do it in the future. It’ll save you plenty of headaches.
Keep Records of Business Expenses
Tax codes change all the time. One year, certain business expenses are deductible and the next they’re not. The best way to make sure you’re covered no matter what the IRS decides is if you keep detailed records of all business expenses no matter how big or small.
When tax season finally does come around, you won’t have to dig through piles of receipts to find proof that you did actually buy that new desk chair this year. One of the easiest ways to track business expenses is by opening a business credit card. Put all your business purchases on the card and everything will be easily and automatically recorded.
It’s the age of technology. Embrace it! Any process that can be automated, should be. If you don’t like being stuck in the office, automating processes can remove much of the administrative work that comes along with being a small business owner. Of all the small business bookkeeping tips, this one will save you the most time and energy.
With automated processes, your bookkeeping can by synced with your business bank account to provide immediate, up-to-date information about your business’s finances from anywhere in the world. Automating your employees’ time tracking can save time by automatically tracking PTO and overtime and importing the data directly to your payroll software. Everything is accurate, instant and requires no additional effort on your end.
Backup All Financial Records
While technology has certainly changed the world and made everyone’s lives a little easier, it’s not without its faults. Don’t keep all your bookkeeping info in one place! If your computer were to die, you’d have to start over. How much time would that take?
Another benefit to automating bookkeeping processes is that it uses cloud-based technology, which means that it’s not computer dependent. All information is stored in the cloud and instantly backed up. If the computer dies, no problem. Just log back in from your new computer and keep on running your business without missing a beat. Keeping a personal hard drive isn’t a bad idea either. The more backups you have, the better.
Watch Accounts Receivables
Too many businesses just invoice and go. Make sure you keep up with monies owed to you so that it doesn’t hurt your business’s cash flow. Whether you’re using a cash or accrual-based system of accounting, keep track of accounts receivables and make sure that customers don’t go too long without paying. By catching behind payments early, you’ll have a better chance of recouping your losses or at least preventing more money from being lost. If you wait weeks, months or even years to catch a delinquent payment, it might be too late.
Yes, keeping you out of the administrative weeds as much as possible is one of the goals of good bookkeeping, but even with automation it’s still going to require some time. Scheduling a few hours per week to sit down and go over the books is a good way to make sure that everything is in order and keep you up to date about the state of your business. You’ll also be able to catch any problems that arise in a timely manner and be able to handle them quickly and efficiently before they get out of hand.
Consult with a Professional
With something as important as accounting and bookkeeping, it’s always helpful to ask someone with more experience than you. Your accountant should be able to offer help in choosing a bookkeeping platform or system that will work best for your business’s needs. Some even offer services to help set up the software and make sure that you’re trained to use it properly.
Many businesses choose to outsource their accounting and bookkeeping entirely. Trained professionals will manage your books while you’re free to run the company. Have your cake and eat it too!
By using these small business bookkeeping tips, you’ll be well on your way towards business growth. Stay organized, check in regularly and use all the tools at your disposal to really start improving your small business.
Are you aware of the Wayfair ruling? Learn about this tax change in our free guide.