Are you good with numbers? Some small business owners enjoy going over their books because it serves as their personal scorecard for how well the company is doing. Others are afraid of numbers or become so preoccupied with day-to-day operations that they neglect their bookkeeping.Whether you enjoy it or despise it, good bookkeeping is critical to the success of a small business. Here are nine bookkeeping tips for small businesses that will help you get your company back on track.
1. Keep your personal and business finances separate.
When your business is new, it's easy to mix expenses and income—but this is a big mistake. Co-mingling business and personal funds can result in major tax issues down the road. You should open a business bank account as soon as you have formed your official business entity. Obtaining a business credit card as soon as possible is also a good idea. Responsible use of a business credit card aids in the development of your company's credit rating, which is separate from your personal credit rating.
2. Use automation whenever possible.
Bookkeeping software streamlines what used to be a time-consuming process of entering data into spreadsheets and manually reconciling figures. Cloud-based bookkeeping software takes it a step further by ensuring that your critical financial data is backed up to the cloud—no more worrying about a crashed hard drive erasing your records. You can also keep your books up to date by banking online and syncing your bookkeeping software with your business bank account.
3. Conduct a weekly checkup.
If you aren't a numbers person, you may have a natural tendency to put off the "boring" part of entrepreneurship for as long as possible. The result is unbalanced books, bounced checks, or unpaid invoices that are months overdue. One of the most important bookkeeping tips for small businesses is to go over your books at least once a week. It will aid in ensuring that everything is in good working order.
4. Conduct a quarterly checkup.
Take a closer look at your bookkeeping and accounting records at the end of each quarter to identify trends, both positive and negative. Do you have any clients who consistently pay late? Are your revenues increasing or decreasing? How do your financials compare to the same quarter last year?If necessary, meet with your accountant to go over the numbers. Regularly reviewing the big picture will help you be better prepared for future financial needs. For instance, if sales are rapidly increasing, you may need to hire more employees or purchase new equipment, both of which may necessitate financing. The sooner you plan for capital, the easier it will be to obtain it when you need it.
5. Monitor and record your employees' hours with time tracking software.
There are numerous cloud-based time tracking products on the market that allow your employees to clock in and out (if they work by the hour) using their smartphones, tablets, or computers. Furthermore, time tracking software alleviates the headaches associated with managing employees' overtime, vacation time, sick time, and so on. There is software tailored to specific industries, so you'll be able to find something that works for you. To make payroll processing easier, look for software that integrates with your bookkeeping software.
6. Keep track of and document all business expenses.
Due to changes in business tax reporting for 2018, you may want to consult with your accountant to determine exactly what types of expenses you will be able to deduct next year. Keep detailed records, including receipts, for anything you intend to claim on your tax returns. Avoid having drawers full of receipts by scanning and digitising them; there are several smartphone apps that make this simple even when you're on the go. Try to avoid paying for business expenses with cash. Using your business credit card for business purchases can help you simplify your expense tracking because most business credit cards categorise your expenses.
7. When you require professional assistance with your bookkeeping, seek it out.
You may be able to use off-the-shelf accounting software depending on your industry and the size of your business, or you may want to customise your software for your specific situation. An accountant can advise you on the type of software you require, set it up for you, and show you how to use it.
8. Keep track of your company's accounts receivable.
Late-paying customers can quickly deplete your company's cash flow. That's why it's critical to keep track of when your receivables are due and to act quickly if they're past due. Contact late-paying customers as soon as possible to find out what's going on with their payment and when you can expect to receive it. If the customer is experiencing financial difficulties, see if you can work out a payment plan to begin receiving some of the money owed to you.
9. Maintain a record of your tax obligations and deadlines.
If you expect to owe money when you file your taxes, plan ahead of time and set aside funds to cover the expected bill. By paying on time, you can avoid fines. The IRS website includes a tax calendar for businesses that you can import directly into your own cloud-based calendar to ensure you never miss an important date. You can even have it sent to you one or two weeks before a tax payment is due. You'll appreciate the nudge if you've ever had a quarterly tax payment due date sneak up on you.
Bookkeeping, in addition to assisting you in fulfilling regulatory compliance, allows you to keep track of the financial health of your company. Quality and cost are important factors in determining whether our best bookkeeping services in Islamabad are appropriate for startups, small, medium, and large businesses alike.
