Bookkeeping for your small business can seem like a daunting task, and many small business owners don’t even know where to start. Don’t worry, my friend – I got you.
Read on for a few simple ways you can streamline your bookkeeping system for your small business.
Why do I need to keep track of this stuff, anyway?
Though the task can be a huge pain, bookkeeping is an essential part of maintaining and improving your business. Complete accounting records are vital at tax time, as well as to get a full understanding of your business.
Regardless of the size of your business, bookkeeping is something you need to stay on top of. Even if you’re self-employed, it’s necessary to keep track of the financial side of things. It’s the best way to ensure that your business grows and remains profitable.
Let’s talk about how to make the process less painful.
Keep track of everything
Get a receipt for everything you buy that’s business related. I’m mean everything, even if it’s your first cup of on-the-go morning coffee. This includes any online or cash purchases. If you’re not used to asking for a receipt, don’t worry. After a few days, it will become second nature. And once you see the tax deductions you can get, saving all your receipts won’t seem like such a pain in the arse 😉
I recommend that you use some type of filing system, right off the bat. Don’t just throw everything into a box or drawer, telling yourself that you’ll sort things out when you have time. You and I both know that time will likely never come… until tax time. At that point, you’ll be drowning in receipts that haven’t really helped you track anything at all.
Apps like Evernote, Receiptmate, Receipts, and Scanner Pro can help you easily capture, store, and categorize your receipts.
Update your bookkeeping system regularly
Whatever your system may be – paper ledgers, spreadsheets, or an accounting software, make a habit of entering income and expenses on a regular basis.
Depending on how often your business conducts transactions, you don’t necessarily need to post to your ledger every day. For example: A retail store can rack up hundreds of sales in a single day, while a slower-paced custom jewelry shop may only make a few transactions each week.
Posting on a regular schedule will make the process easier to manage, and will give you a detailed and up-to-date view of your business’ finances, regardless of the size of your business.
Keep your bank accounts reconciled
A bank reconciliation matches the balances in your books with information from your bank statements. These should take place at regular intervals, typically every month, to make sure that your record of how much cash the company has is accurate.
A bank reconciliation can also detect cases where fraud has occurred, so that you can then develop better controls to govern your bookkeeping system.
Invest in a professional bookkeeper
Though some business owners take care of their books on their own, the benefits of hiring a professional bookkeeper usually outweigh the costs. The less time you spend on the books, the more time you can spend on your business.
Bookkeepers are trained to examine your records and correct any errors that otherwise could have been costly. Your bookkeeper will also manage things such as payroll and expenses, ensuring that everything is paid in a timely manner, and that your financial systems are accurate and efficient.
Side note: I’m a bookkeeper and Quickbooks ProAdvisor and I’m accepting new clients!
Keeping these points in mind as you establish a bookkeeping system for your business will help you stay ahead of your business’ accounts. Using the data you’ve collected with your bookkeeping system, you can generate detailed financial reports. These reports help you to see the big picture and gain a better understanding of your company’s finances. With that, you can turn your focus to areas where you can best help your company grow!