Welcome to the topic “Top 10 Bookkeeping Tips for Small Businesses”
Any business can find accounting tiresome, but filing your taxes could become a nightmare if your small business doesn’t keep accurate records. Without a structure in place for your company’s finances, a lot of things may go through the gaps and ultimately cost you money.
You may improve your financial status and perhaps raise your income with a simple approach and some bookkeeping advice. The objective is to have a straightforward method outlining your company’s finances produced. Your life as a small business owner can be made ten times easier by having a system that combines your costs, invoices, deposit records, and tax information, especially as tax season approaches.
Bookkeeping Tips for All Year Around
You have a lot to do as a business owner, from managing your day-to-day business operations, dealing with clients, developing marketing plans, networking, and maintaining a seamless process. Finding the time to analyze the data, manage your cash flow, and sort through financial spreadsheets is challenging.
Here are ten crucial bookkeeping pointers that every firm should be aware of, so read them before you spend another late night going over spreadsheets.
1.Utilize automated cloud-based accounting software
We’re fortunate to be in a time when cloud-based accounting software allows business owners to access their company data whenever they need it. Every month, heaps of documentation need to be sorted through, spreadsheets need to be checked, and manual calculations need to be done. The majority of your hard work is now done for you by cloud-based software.
Accounting software may track your incoming and outgoing expenses, send bills to clients automatically on the appropriate due date, and produce reports on your cash flow. There are many different software options available.
The option that simplifies your life is the one that is best for you. If you’re unsure which option is best, you can always consult a bookkeeping specialist for clear guidance.
2. Check Your Accounts Receivable Monthly
A client owing you money for services is not the same as having that money in your business account, especially at the end of the year. To ensure that you receive all the monthly payments you are due, keep an eye on your accounts receivable. Income declines in the absence of receivables. Running a versions receivable report regularly will help you keep track of any past due payments you are owed.
You will be able to spend more time expanding your business and less time managing your company’s finances if you use these bookkeeping methods to keep your records in order.
3. Establish a simple system for keeping records.
Every transaction your company conducts should be documented and organized so you can easily update them and manage your cash flow. You may foresee future business prospects and ensure tax compliance in the event of an audit by keeping track of all business records, including invoices, receipts, and expenses.
Even though there are simple solutions to digitize your paper receipts, if you prefer to maintain paper records, they should be organized into a straightforward system and kept in a secured and secure cabinet. A backup of your documents is also recommended in case something is lost.
An alternative is to use most cloud-based bookkeeping software, which can scan receipts with your phone and store them for you. It can also send electronic bills directly to your online bookkeeping system for reconciliation and record-keeping.
4. Make recurring reports
Not only are sound bookkeeping practices crucial for tax planning. Maintaining a record of your cash inflows and outflows makes it simple to carry out routine financial checks. You can ensure that all your clients pay their invoices on time and prevent any reporting gaps using the appropriate accounting software.
Although performing monthly checks is a good idea, you may want to look more closely at your accounting and bookkeeping records at the end of each quarter. Consider trends like diminishing or increasing revenue, significant expenses, or evidence of late-paying clients. A proper analysis of your figures will assist you in making plans for future cash flow that will be more favorable.
5. Get a Reliable Advisor
Having a good advisor on staff can assist you at least once a month can be beneficial. They can provide you with adequate bookkeeping instruction, respond to your inquiries, and correct any mistakes that may have been made. You have a lot of options if you need an accountant, so don’t panic if your budget is limited.
The experience and endorsement could be helpful in the resume of an accounting major at your neighborhood college.
6. Plan ahead for paying taxes
There aren’t many things more wonderful than realizing your company is profitable. You can elect to invest all of your surplus funds back into the business as soon as you see you’re starting to turn a profit. Maintaining your company’s momentum can be done by investing profit in product development, marketing, and other growth methods, but don’t dive in headfirst.
Remember that at the end of the year, you will need to set aside a portion of your income for tax-related charges. To make sure you have enough money to pay your bills, you should be saving at least a portion of your income, perhaps 20 percent.
7. Paying Your Workers On Time
If you have employees working for your company, ensure you act responsibly by paying their wages or salaries on time. For their food and bills, employees depend on getting paid on time.
Make sure you save money with each pay run to offset the payroll tax deducted from the employee’s compensation. The government owns this money; it is not yours.
Payroll returns must be filed, and payments must be made on schedule. Do not “forget” to complete these tasks. Late filing or payment may result in penalties for your company (an absolute waste of your business funds).
You may try to complete the payroll manually, but many online or desktop software tools are available at reasonable prices that make the work quick and simple. Alternately, hire payroll experts to do it.
8. Track Cash Transactions
It’s simple to overlook this when you’re initially starting in business, but you also need to keep track of your cash payments. Even on business-related purchases, all money received by the company must first be deposited into the corporate bank account. It could be tempting to utilise the funds now to purchase supplies, but doing so could easily mess up your bookkeeping procedure.
To avoid having to follow up with the customer again, identify who made the payment when you record cash payments. Speak to a bookkeeper who can help you set up and utilize your accounting software properly if you’re confused about how to handle the specifics of a cash payment.
9. Set a reminder for critical deadlines.
As a business owner, the majority of your time is spent juggling multiple challenges. With so much on your plate, it’s simple to forget when it’s time to pay your regular company invoices, payroll taxes, and GST. Set reminders for yourself to prevent missing deadlines that could result in a fine or an unhappy partner. You can accomplish this using your smartphone or even your online email calendar.
If you frequently check your physical calendar, even making notes for a few days before the deadlines will help you stay on track.
10. Separate your personal and professional accounts.
At first, glance, mixing your personal and corporate finances might not seem like a big deal. However, every company must have a separate bank account from any personal one. Depending on the nature of your organization, a different business bank account is frequently required.
This separate account will save you time, effort, and frustrations by making it more straightforward for you and your accountant to identify the purchases and sales pertinent to your company.
The Bottom Line
Are you one of those entrepreneurs that adores spending hours gazing over spreadsheets? Neither do I. Yes, your company’s financial records serve as a scorecard for your performance, but if you’re not a “numbers person,” keeping your books may not sound as enticing as getting a root canal. Others, however, never review their business finances because they get preoccupied with the daily grind.
The appropriate bookkeeping method is essential whether you manage most of your accounting or hire a professional to do it for you. If you use the advice above, your company’s cash flow will be easier to comprehend, tax problems will be less of a concern, and there will be more room for expansion.
Have questions or comments about “Top 10 Bookkeeping Tips for Small Businesses”, leave a comment below or contact us at info@speedfinancialgroup.com.
Also Read: Best Softwares to Use to Keep Records for Your Accounting
