Accounting is something that most people wish to avoid. They can not be blamed as it is complicated anyway. However, it is one of the most crucial elements of a business, especially if you are running a small business. Not maintaining your books properly can land you in a tax nightmare.
Bookkeeping helps you manage your finances more effectively and even enhances your business. You can get a better insight into your business with an online bookkeeping service.
To simplify your business transaction, make sure you save your receipts, especially those of over $80. These documents will work as a backup when you are trying to get tax deductions.
Make sure you reconcile your bank statements with your book each month to avoid errors. You can’t wholly rely on technology after all. Do not forget to document your deposits, too, so you could track what’s going into your bank account.
Bookkeeping is essential for SMEs and large companies. A company that neglects this activity is liable to sanctions that may come from the tax services, but also from the State. The obligatory nature of this activity must therefore be taken into consideration. On the other hand, it is important that this bookkeeping is done in the most natural way possible. This will not be the source of stress and the documents will be error-free.
We would like to share the top 6 great tips for your bookkeeping business through this article’s medium.
OUR TOP 6 SMALL BUSINESS BOOKKEEPING TIPS
#1 ORGANIZE YOUR FINANCIAL RECORDS
It is highly recommended to organize your records such as business invoices, receipts, and expenses. These records can lay a significant impact on your books. You may end up causing issues with your business’s financial health if these records are not up-to-date.
If you like your records to be on paper, make sure you store them and organize them well with the help of files and labels.
If you do not prefer paper records, you can switch to electronic media instead. Store your paperless financial documents in your device or cloud. Saving your records on the cloud will guarantee a backup.
The best way to organize your financial records is to save a soft and hard copy of both. This way, you can avail yourself of better security of your documents.
#2 KEEP YOUR BUSINESS AND PERSONAL FINANCES SEPARATE
One of the primary reasons your accounting becomes more complicated is to mix up your personal and financial records. Things become way more manageable if you focus on one account at a time. You can save yourself a bulk of time by keeping these accounts separate and preventing any chances of financial complications.
#3 OUTSOURCE A PROFESSIONAL BOOKKEEPER
Despite your best interests at heart, you might not be able to prioritize admin work. You must seek professional help as it can benefit you in such ways you might not even realize. This step can save you a fortune of time, and you can use it in other crucial business areas such as running your business’s sales, services, and operations.
You can consider outsourcing professional bookkeeping services Houston if you don’t have one already. Your accountant might provide this service, or he could refer a trusted contact in his network, so start talking this out with your existing team.
#4 MONITOR YOUR MONTHLY ACCOUNT RECEIVABLES
There is a difference between having a customer owing you money and having it in your small business account. Make sure you are on top of account receivables and receive the owed payments by your clients. Regularly analyzing your account receivables can benefit you a lot.
#5 SET DEADLINE REMINDERS
Running a busy business can even make you forget your business deadlines. It’s too late when you realize this.
You can prevent missing deadlines by setting up reminders and include tax return due dates within your calendar, so you don’t miss out on any. You have opt for an electronic calendar and track important dates, and set reminders.
Foresee your tax requirements and set aside time and money already for the same. This will help you pay your taxes on time and catch up with the deadlines.
#6 TRACK YOUR EXPENSES
We advise you to track all your expenses irrespective of their size. Be it on debit cards, credit cards, or cheque payments. Make sure you record those transactions. Furthermore, you can download your bank transactions by the end of each month. This way, you can prevent backlogs of any kind in the future. You can understand your business cash flow better and recognize your assets.
#BONUS: AUTOMATE WHEREVER POSSIBLE
Automation can be a lifeline for any small business. The further you automate, the more time you will have to devote to your business.
Try automating the tax process via accounting software to simplify the accounting responsibilities. Say farewell to spreadsheets and manually grinding figures with apps.
Consider storage, connectivity, and security when looking for accounting tools. Have a list of essential items for your company, such as specific features, prices, and reports.
Don’t buy tech on the spur of the moment. Do your research to determine which applications would better meet your and your company’s needs.
- Simple part accounting or cash accounting: transactions are recorded only once, either in the form of expenses or in the form of income. For clarity, the entries are grouped together in a table that fits on one page, called the income journal, and the outputs on another, called the expense journal.
- Double entry or accrual accounting: transactions are recorded twice, once on credit and once on debit.
Whatever type of bookkeeping is chosen, the system must be reliable, precise, consistent, easy to use and understand, in order to allow easy access to the necessary information at any time. Procedures for checking the accounting entries must be put in place, and first of all the bank reconciliation which makes it possible to compare the bank’s entries with those recorded in the accounts. It is carried out at least once a month upon receipt of the bank statement.
The accounts can be kept in the form of spreadsheets, but this system is relatively cumbersome, the functionalities limited and part of the errors are only detectable at the end of the year, that is to say at the time to release the financial statements. Conversely, accounting software can save time, limit errors, automatically calculate taxes and make precise financial forecasts. Today, most are available online, and many are free or inexpensive.
Up-to-date accounting books provide information on the financial health of a company from its inception to the present day. Thanks to these documents, it is even possible to have a graph showing the evolution of the company’s finances over the years. Accounting books become documents that greatly assist in the decision for financial security and business development.
Point to be remember:
Good bookkeeping certainly makes it possible to meet legal obligations, but it is also an essential management tool. By rigorously following your accounts, you know your company’s performance in detail and in real time. It is thus possible to compare them with the results of past periods, to make forecasts and to make informed decisions.
We hope the tips mentioned above could help you with your bookkeeping. You need to organize your records as these records impact your business’s finances directly. Ensure you separate your business and personal finances as it will save you a bulk of time which you can later use on other crucial business tasks. Do not underestimate the need for a professional bookkeeper; you might not even realize it, but this way, you can save yourself a lot of time. Make sure you monitor your monthly account receivables; this way, you can stay on top of account receivables. Set reminders for deadlines, so you don’t miss—any in the future. Track your expenses as this will help you track and control your business expenses. Lastly, automate wherever possible. This is a very effective tip as it promotes the accuracy and saves your time.