A solid small business bookkeeping system is an essential aspect of running a business. No matter how small your business is, you should make sure that your books are updated, accurate, and readily available, as it provides you with crucial information on your business’ financial standing. Check out these expert bookkeeping tips to help you along the way.
1. Schedule a Monthly “Bookkeeping Time” in Your Calendar
Some business owners get behind on categorizing the transactions in bookkeeping software. And if you wait too long to do your bookkeeping, you may forget what certain transactions were for, making it necessary to go through your receipts one by one. This unnecessarily prolongs and complicates the bookkeeping process. Rather than doing bookkeeping whenever you get around to it, you should set a time at the end of every month to do your bookkeeping. It’s far easier to keep to a monthly bookkeeping schedule if you set it for the same day and time every month. Doing so will help ensure that the bookkeeping process is as efficient, painless, and accurate as possible.
2. Automate Whatever You Can
Entering data into spreadsheets and reconciling numbers manually is so old school. Use cloud-based bookkeeping software, and do your business banking online. That way, you can sync your bookkeeping software with your business bank account so you always have accurate, up-to-the-minute records. Plus, with the cloud, your critical financial data is backed up safely off-site.
3. Track Financial Data Monthly
It’s important to keep track year over year and based on month so you can evaluate seasonality, anticipated trajectory, and growth. If you track monthly based on the category of income, it can help you see which areas of your business are increasing, which are decreasing, and areas for potential improvement. You may also find areas where you should invest more because your ROI is higher in particular areas. It’s important to not just track annual numbers, but monthly and quarterly as well to assess them in the shorter term as well as overtime. There may be small fluctuations, but this helps you build trends.
4. Keep Records of ALL Business Expenses.
So many changes to the tax code were made for 2018 that you should consult your accountant for guidance on what kinds of expenses you can deduct next year. For anything, you think you’ll be claiming, maintain detailed records; save time by scanning and digitizing receipts. You can also simplify expense tracking by always using a business credit card for business purchases.
5. Keep a Close Eye on Accounts Receivable.
When customers don’t pay on time, your business’s cash flow can dry up fast. Pay attention to when your receivables are due and contact late-paying customers right away to nudge them along. Even if a customer is having financial problems, you may be able to set up a payment plan to get at least some of what you’re owed.
6. Correct Errors as Soon as You Find Them
This may sound obvious, but if you find any discrepancy when reconciling your books, try to resolve it as soon as possible—no matter how small the discrepancy is. Find the source of the error and have it corrected immediately. Do not let the discrepancy be carried over to the following months, as it will just get bigger and it will be more difficult to correct it. Make sure your books are accurate and up to date from the start. Small business bookkeeping services can ensure your books are 100% accurate.
7. Don’t Overlook Managerial Accounting
Many small businesses tend to focus their accounting on taxation and compliance. That’s fine, and obviously necessary, but it’s also important to work with your accountant or small business bookkeeping services to ensure that you have measures in place to allow for managerial accounting. If you have the ability to access and manipulate your accounting data in a way that readily informs your business decisions, it can help you plan for growth.
8. Accepting Digital Payments From Customers
If you run bookkeeping at your companies (accounts receivable and payable), consider accepting digital payments from your customers. You can automate your payment system and help streamline the job of bookkeeping. This takes place in the form of eCheck, mobile payments, ACH, or even bitcoin.
9. Maintain Detailed Inventory Records
Small businesses often don’t have the benefit of a large staff to take care of tasks like inventory maintenance, which are important but often overlooked. Having a proper inventory management process can help small businesses prevent employee theft or misplacement of merchandise. These records can also help businesses track customer shopping trends and ensure efficient buying in the future.
10. Ask Small Business Bookkeeping Services For Help
Talk to your accountant to figure out if you can use off-the-shelf accounting software or if you’d benefit from customizing it. Small business bookkeeping services should be able to not only offer advice but also set up the software for you and show you how to use it.
No matter how you feel about bookkeeping, it’s one of those tasks no business owner can avoid forever. Bookkeeping isn’t something everyone is equally good at. If you feel like your time would be better spent with other tasks like business development or looking for small business grants, reach out to small business bookkeeping services
Limitless Investment and Capital Small Business Bookkeeping Services
If your small business needs advice, or feel like you can’t run the accounting function on your own, don’t hesitate to reach out to a Limitless Investment and Capital small business accounting expert in Phoenix and Denver! Our bookkeeping services can include anything from advice to preparing financial reports, tax returns, or even day-to-day management of your books.