Unless you’re an accountant, bookkeeping probably isn’t on your list of favorite things to do. But by following a few easy tips, you’ll be able to avoid costly mistakes. While it may seem easier to remember several financial details in your head (which customers are outstanding, which suppliers you need to pay, etc.), it won’t work out for you in the long run. Details seem to slip, paperwork is forgotten, deadlines missed, and goals are left unreached. With the right bookkeeping advice, you’ll have a better handle on your money and it’ll help you manage long-term goals.
1. Properly maintain your daily records
According to Inside Business 360, even if a business is financially unstable, good record keeping can help put it back on track. This may sound like an obvious tip, but it is one that is often overlooked. Without keeping accurate daily records, there’s no way you can accurately keep track of your business’s financial situation. It’s important that you use proper and up-to-date record keeping systems each day. With the right system, maintaining good records shouldn’t take up more than a small portion of your day.
2. Leave a trail behind you
You should always be able to track your business’s financial moves easily. All invoices and checks should be in numeric order, have separate bank accounts for business and personal reasons, and double checking check and invoice numbers to make sure nothing was skipped. You should be able to go back as far as you want and follow your company’s audit trail.
3. Keep track of your expenses
If you aren’t keeping good track of your expenses, you may be missing tax write-offs. Business cards could be a great way to aid you in this. Many providers now allow you to categorize your bills into types of expense. You should also keep track of business meetings and occasions where you’re treating your clients. You should have five years worth of receipts, invoices, and statements from business operations. Have your tax and compliance obligations in order; you should be systematically putting aside money for taxes.
4. Keep track of your expenses
Create a filing system and use bookkeeping software to help you. With so many receipts, invoices, bank statements, etc., to keep track of, it’s important to have a filing system to help you manage it. You can try creating filing systems based on tax categories, making it easier to organize receipts during tax time.
Bookkeeping software will help you manage your business’s finances using spreadsheets. It also helps you easily create reports. You’ll need to analyze the needs of your business to determine which bookkeeping software is best for you. For small businesses, Inc. magazine recommends the QuickBooks series by Intuit or Simply Accounting by Sage Software for their easy drag-and-drop interface.
5. Keep track of your expenses
You’ll need to have an overview of all of your business activities for the month. These reports help keep you organized and you can compare transaction reports to your bank statement to make sure everything is accounted for. You should have an accounts receivable report (for clients who owe you money) and an income and expense report. You can thoroughly evaluate your business every month by examining these reports and seeing if they provided a financial return.
Know when to call in a pro. Even if you’ve been doing your own bookkeeping for years, there’s no harm in calling in some extra help—particularly when tax season rolls around. Professionals are well versed in what they do and will almost always save you money. They’ll usually find more deductions than you did and will keep you penalty-free.
