Thursday, May 6, 2021

Improve Your Small Business Bookkeeping

Are you a small business owner who is never happier than when pouring over a spreadsheet? Probably not. Your business’s books are a way to judge how well your business is performing, but if you’re not confident with numbers, doing your bookkeeping can be a real headache. A lot of business owners have good intentions of keeping up with the business finances but get distracted by the day-to-day needs of their business and don’t get around to it. However you feel about bookkeeping, it’s a task that no business owner should put off. 

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  1. Separate business and personal finances. Forgetting to split your finances is a mistake that is common in small business accounting. It can cause a lot of confusion for you later on, especially at tax time. Open a business bank account as soon as you start your business, and get a business credit card. This splits your accounts and helps your business to build a credit rating.  

  2. Automate whatever you can. Entering data into spreadsheets and reconciling the numbers manually is an old-school system. Ditch the spreadsheets and use proper bookkeeping software instead, and handle your business banking online. This means you can sync your bookkeeping software with your bank accounts to make sure you always have accurate, up-to-date records. 

  3. Ask a professional. Talk to your accountant to see if you could use an off-the-shelf accounting software solution or if you would do better with a customized version. Your accountant should be able to offer helpful input and should be able to set up your software and show you to properly use it. If you want to understand more of the money yourself, you can take certified tax preparer courses

  4. Carry out regular financial checkups. If you put off your bookkeeping for too long, you can end up with all kinds of issues to fix like bounced checks, overdue invoices, or figures that don’t add up. Go over your books weekly to make sure everything is in order. 

  5. Do a quarterly review. At the end of each quarter, have an in-depth look at your records. Look for trends like growing or declining sales, year-on-year revenues, or an increase in late-paying customers. Your accountant can help you to understand the bigger picture so you’re ready for future capital needs, like buying equipment or moving to new premises. 

  6. Keep records of business expenses. Tax codes often change, so you should ask your accountant for help on the kinds of expenses that you can deduct next year. Anything that you think you can claim for needs records. Scan and digitize your receipts.

  7. Monitor your employees’ hours with time tracking software. Software like this allows staff to clock in and out on a smartphone, tablet, or computer. This makes your life easier, as it will automatically keep track of things like overtime, time off, and sick days. Choose the time tracking software that will work the best with your bookkeeping software and make payroll much simpler to run too. 

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