Many startup enthusiasts find bookkeeping a big task. Though, it’s a fact that accounting is an unavoidable offshoot of business. But recording down figures into columns, decoding months-old receipts, and pondering over numbers which got strangely misplaced is no one’s ideal hobby.
However, bookkeeping doesn’t need to be that way. It’s a fact; it may never be your ideal business administration task, but, with bookkeeping tips including the right spirit and essential tools, you’ll find bookkeeping very easy and time effective to make your life hassle-free and put all the energy in business.
17 Small Business Bookkeeping Tips
Here are 17 simple bookkeeping tips for small business owners.
1. Record Every Transaction
To keep track of where your business stands financially, your need to record each and every single penny that is credited or debited. Make a habit of recording all the transactions right after it takes place.
Remember, even a small amount can cause a lot of problems with your books. As time passes by, your business will experience more and more money with no proper record of any transaction. Make the entry instantly so that you won’t miss any of them and keep your books updated.
2. Update your Books Frequently
One of the best bookkeeping tips includes updating frequency. Consistently update your books from time to time. For most precise numbers, it’s best advised to keep your records updated and check on an everyday basis.
However. This takes time, but neglecting on a daily basis may result in various accounting obstacles. It is crucial to know your business’s performance. In the absence of real-time bookkeeping, financial hurdles can quickly occur. In case you don’t have enough time or required skills to do the bookkeeping on your own systematically, you can always outsource bookkeeping or opt for virtual bookkeeping services.
3. Keep Track of Important Dates
Keep track of when to make payment for bills, when a customer’s payment is due, and when is the time to review all financial statements. Regularly jot down the dates and for your accounting transactions, and best to set the reminders on your computer or anything handy. Don’t miss out on dates of due taxes and when to file essential reports.
A commonly made mistake made by small business owners is miscalculating the time and energy needed for bookkeeping, which ultimately leads to late payments or cost very hard. In case you are standing way behind your schedule, consider the bookkeeping tips and tricks to start the process.
4. Learn Key Information
Being a small business owner, make sure that you seize the elemental concept of accounting. A fundamental understanding of the basic terms, formulas, and reports is not enough. You may risk making some big mistakes. Get the knowledge of the most basic accounting expression and learn how to use core financial ratios.
Furthermore, look at statements and gain an understanding of its use. When you get a fair understanding of how accounting works, you can manage your books, and maybe you don’t require to outsource bookkeeping.
5. Review your Reports Regularly
Small business bookkeeping tips always tells you to gain proper knowledge before jumping on the practical. Every small business owner wants to make decisions based on accurate knowledge of where the business is positioned. One can do this effectively by reviewing your financial reports regularly.
It’s best to maintain a fixed schedule for the same, be it looking at the reports at the end of every month. Every report varies in information and helps in making different decisions. Although, these reports are of no use if you don’t check them frequently. It’s vital to know the business’s financial position.
6. Communicate well with your Bookkeeper
It’s terrible for your business’s growth if there is any communication barrier between you and your bookkeeper. Get a mode of communication that is suitable for both of you while keeping him/her involved with your business events. This is very crucial when you are using outsource bookkeeping or virtual bookkeeping services.
7. Learn the Basics of Bookkeeping and Accounting
Opted for online bookkeeping services and thought it would require no involvement from your side? Even with the best service or software, you need to know the basics of its operation to cross-check the statements and be updated. The software does not eliminate any accounting related problems. It’s best to have adequate knowledge.
8. Partner with a Professional who eases your Stress
Look out for someone who can hear your needs when you go out in search of support. An Outsourced bookkeeping professional who lets you focus on your business and can communicate the financial position in a way that is fruitful for your budding business.
9. Interpret and Analyze Before Making Decisions
Making relevant financial decisions is best made if prefixed by these three following steps: interpreting, analyzing, and advising. Producing numbers is the initial step. What do these numbers mean? And most crucial, how can you better them? Take time to analyze and interpret your financial reports and follow the bookkeeping tips. It would be best if you gave time and put effort into these reports to remain passive, so it would be meaningless not to use them in your favor to refine your business.
10. Determine the Financial Health of your Business
Having your bank accounts filled with money is not financial stability. Small business owners generally fall short of their liabilities into thought. One needs to take the time to give thought to all the elements that make sure your business’s health, including capital, assets, and liabilities. Once you are clear of these components, it’s easier to get an estimate of your debts and funds.
11. Avoid mixing Personal and Business Expenses
The most basic bookkeeping tips involve the advice not to mix your personal and professional expenses. Be careful before making any transaction with your card. Even small expenses can add up, so stay cautious about your transaction.
In case you are regularly mixing your business and personal expenses, you may end up being short on deduction or overspending. Business owners lose money or violate the taxes; either way, it is not good for business.
12. Use Apps to Create Digital Records of your Receipts
However, most banks offer mobile apps and websites to keep track of your financial transactions; receipts are still vital. Paper receipts are not required anymore. Applications like Shoeboxed and Expensify are new in the market, enabling the user to catalog your receipts just a snap away with your smartphone for later use. These digital images will be kept for easier references and extraction later. This allows you to get rid of the paper stacking.
13. Make Proper Backups of your Files
Whether you are maintaining files digitally or in hard copy, make sure to keep the proper backup. Without backups, in case of any mishaps can lead to unreported losses to the business.
It’s important to make digital copies of your physical documents and save it on both local drives with a cloud backup to be double sure. Cloud services protect your data against any mishaps, which enables the storage of multiple copies on varied servers. Furthermore, it is user friendly as it gives access from any internet secured devices.
14. Make Frequent Bank Reconciliation
The process of collating your accounting records with your bank statement is referred to as bank reconciliation. Most of the time, business owners prefer to do this every month, but one can do it even on frequent periods. The target is to ensure the deviation between the records that can account for it. These can occur amid bounced or uncleared cheques and pending payments.
However, this could happen amid errors, embezzlement, and fraud. If you fall short on your bank reconciliation, there is a risk of letting the issues grow. Online bookkeeping services let you keep the reconciliation at ease.
15. Hold your Employees Accountable to Reach Goals
The bookkeeping process holds a lot of people answerable, including customers, employees, and clients. To meet your target, it’s best to focus on keeping your employees accountable. If you have a strong budget and estimate in place, then you can do financial reporting analysis on your business on your own.
Make it a regular part of your routine to check your financial reports with your sales and marketing team. Bookkeeping tips advise that it is an efficient way to calculate growth and keep your business on the perfect path.
16. Invest in a Proper Bookkeeping System
An effective bookkeeping system can showcase precisely where your business stands in terms of financial outlook. It keeps you away from any unannounced uncertainty, so investing in a sound bookkeeping system is worth it. Outsource bookkeeping and online bookkeeping services help you focus on your business entirely. A dedicated bookkeeping system can be the solution to many hurdles.
17. Make Sure your Bookkeeping System is Ready for Growth
Measuring a small business is tricky but trying to measure without an efficient bookkeeping system makes the job even more deceitful. Before selling anything, take a moment and make sure that your bookkeeping system is ready for immense growth.
As you grow, bookkeeping needs will evolve, and you need to alter your ways accordingly to reach the demands. It’s simpler to make adjustments if you have a proper system for bookkeeping from the start. Seek small business bookkeeping tips to create an effective method for your financial reports.
It’s natural to feel submerged by all this until and unless you are a financial expert; accounting, bookkeeping, and taxes can seem like an intimidating task to any small business enthusiast. If you need any assistance or financial advice, contact a professional. These bookkeeping tips include everything from advice to creating reports to manage your book effectively.
If you feel that your time is better consumed at other tasks, it’s ideal for reaching out to a virtual bookkeeping service or outsource bookkeeping.