Bookkeeping services are critical to the proper functioning of your business. Here are the twelve tips on how to streamline the same.
When it comes to running a small business successfully, one of the most important aspects is a robust bookkeeping system. Irrespective of the nature or size of your business, it is essential to keep your books updated and readily available, as it reflects the correct financial health of your business at any given point of time.
Why is Small-Business Bookkeeping Important?
Bookkeeping is an essential activity that all businesses need to perform. The primary objective of bookkeeping for small business owners is to help them manage their day-to-day operations efficiently, plan, and prevent any unforeseen circumstances that can lead to audit requirements by centralized revenue agencies.
Accurate bookkeeping also provides a crystal clear picture of how well the business finances are performing along with highlighting cash flow or revenue problems if any.
How To Do Small Business Bookkeeping ?
Here we are discussing 12 small business bookkeeping tips to help you keep your records accurate all the time
1. Automate as much as possible
Small businesses need to adopt innovative solutions to survive in today's fast-paced business environment. Instead of using cumbersome and time-consuming methods such as manual reconciliation of numbers or entering data into spreadsheets, use various cloud-based software available in the market for bookkeeping. Not only it allows you to back up your critical business data safely, but it also lets you keep accurate records of all transactions.
2. Avoid paying your expenses or bills in cash
While managing bookkeeping services for small businesses, it gets challenging and cumbersome to keep track of all the costs paid in cash. It is, therefore, wise to avoid paying your bills in cash as much as possible. During the instances when it is necessary to use some money, make sure to record each transaction, including tax components to keep your bookkeeping records updated.
3. Maintain day-to-day records
It is necessary to keep each record accurately to track the financial health of your business. Irrespective of the record-keeping system/ software you choose, make sure to use it daily. The idea here is to match the cash deposits made by your business against the cash receipts as reflected on the bank statement. Performing such kind of daily monitoring helps you keep your bookkeeping records up to date.
4. Hire a professional bookkeeping service provider
Keeping reliable bookkeeping records, including taxes, compliance, and payroll, is a much-complicated process than expected. Even a small error or inaccuracy can have severe tax and other legal implications on the business. It is, therefore, best for small business owners to hire a professional bookkeeping service provider to ensure minimal risk and complete accuracy in the process.
5. Ask customers to make payments digitally
One of the smart bookkeeping tips for small business owners is to consider accepting payments from their customers in digital format (net banking/digital wallets/fund transfer). It will not only help in automating the payment system but also in streamlining the entire process of bookkeeping.
6. Always keep your records organized
The common mistake that most small business owners do is not keeping their records held until the last minute. Instead of waiting till annual reconciliation or tax filing time, businesses must gather, organize, and keep all receipts, purchase bills and other necessary documentation ready beforehand.
7. Invest in a time tracking software
Investing in a Cloud-based time tracking software that automatically syncs with your bookkeeping software is an excellent way to not just monitor employee hours but keeping all your records clean and easily accessible.
8. Monitor your accounts receivables closely
One of the thumb rules for keeping your bookkeeping records accurate is to monitor your account receivables closely. Non paying customers can eat up your cash flow and make your books go entirely out of order. Keep an eye out for receivables due with constant reminders to get your dues from customers in time.
9. Treat your tax deadlines as sacred
Planning for taxes beforehand is one of the most crucial aspects of full proof bookkeeping. It allows you to be prepared and set aside money for any anticipated or unanticipated tax bills as well. One of the great ways of doing this is syncing your cloud-based calendar with that of the IRS website tax calendar to remain on top of tax deadlines.
10. Do regular financial health checkups
Never make the mistake of putting off your bookkeeping for too long as it can prove fatal for the financial health of your business. If you don't want to deal with overdue invoices, unpaid taxes, or bounced checks at a later stage, make it a point to go through your books regularly.
11. Keep your personal and business finances separate
Ask any expert and the bookkeeping tip they are going to offer is never to mix up business and personal finances. Apart from having tax implications, mingling personal and business money can soon lead to other complications as well.
12. Ensure to get your bank statement with a month-end cutoff
It is another essential bookkeeping tip that can help your small business reap big rewards. By checking your monthly bank statements and synchronizing them with other critical monthly records will make it super convenient for you to track expenses as well as reconcile your statement.
To sum it up
While bookkeeping for small businesses can feel like a mundane task when compared to the challenges of running the actual business itself, it is equally essential to the success of your business. The above 12 bookkeeping tips will not only allow you to remain on top of your bookkeeping game but also save time, money, and unnecessary stress in the long run.