Accounting can be one of the hardest jobs for owners of small businesses, which is why we will use this article to discuss some small business bookkeeping tips that will be sure to save you time and money. Here are seven tips that every small business owner needs to know:
The first step for a successful accounting strategy is to look ahead and identify your business’s potential needs so that you can plan for those expenses to occur. For instance, if you know that a major piece of equipment will need to be replaced soon, you can begin setting aside money each month to cover that cost. Other big expenses could include inventory, repairs, maintenance or office supplies. It is also wise to put aside money every month to cover other costs, such as annual taxes, to make that April 15th deadline much less stressful.
There have been many advances in accounting software over the last ten years, with programs such as QuickBooks and QuickBooks Online making it much easier to keep track of cash flow and expenses. These programs allow you to create custom invoices, track billable hours, budget, track unpaid invoices, and pay bills. QuickBooks Online even allows you to access your account from anywhere rather than having to go into the office to do your bookkeeping.
It is critical that you keep your business and personal accounts separate. Doing so makes it much easier to keep track of your business-related purchases (many of which are tax deductible) and makes your tax filing much simpler.
While it might seem easier to ignore your bookkeeping until the end of the year, you are actually creating a much bigger headache for yourself. Schedule time every week or month to work on bookkeeping so that you stay current. The more you stick to this schedule, the easier it will be to keep an accurate look of your business’s finances. This will also eliminate a lot of stress.
Another one of our seven small business bookkeeping tips is to check your invoices frequently. It is common for many clients to pay their bills late. Using accounting software to run a report will help you to see which invoices haven’t been paid yet. This will allow you to send out reminders before too much time has passed, and will help you keep a healthy cash flow coming in.
While it is tempting to save the money and try and do bookkeeping yourself, it is a worthwhile investment to hire an expert. This expert could be a trusted financial advisor that specializes in your industry or could be a general accountant that handles your tax filing and payroll. If you are really worried about the cost you could also hire a student with an accounting degree as an Intern to keep costs low.
Most accounting experts encourage business owners to only use credit or debit cards to pay for expenses because cash can be very difficult to track. It is also important to view the transaction immediately in order to make sure all the items are legitimate business expenses to avoid any problems with tax write-offs.
You can save yourself a lot of headaches by staying on top of your accounting and using these small business bookkeeping tips. It is also wise to hire an accountant to help you with your bookkeeping. Even if you only work with them initially, they can help you tremendously with getting a solid accounting system in place, which will make your bookkeeping easier throughout the years.