There’s a lot to know about bookkeeping for small business. Click here for essential tips that can help you save time & money!
Unless you own an accounting firm, you probably didn’t start your small business just to keep books. Yet, bookkeeping represents a chronic responsibility associated with running a successful company.
In essence, it’s a necessary evil.
But what if bookkeeping for small business has got you down, and you’re thinking about throwing in the towel? Before you say sayonara to life as an entrepreneur, check out these five tips for small business accounting success.
1. Give yourself a pay stub
Does this scenario sound familiar to you? You’ve recently launched a new business, and you’re not bringing in tons of money yet. As a result, you let your business and personal expenses get hopelessly jumbled.
Of course, you don’t realize this until tax time rolls around. Then, you painstakingly try to sort out your business and private life. Ugh!
Yes, we’ve all been there. But it doesn’t mean you should stay there.
Allowing your business and personal finances to remain convoluted is a bad idea. Not only will it keep you from feeling organized and professional, but it can mean serious ulcer-time come tax season.
So, what’s the better strategy? Establish separate checking accounts and credit cards. Ideally, you should also keep your own payroll.
When you create a pay stub, even for yourself, you benefit from paper documentation for your company. This represents one of many important steps in extricating your business expenses from your private ones.
2. Stick with a bookkeeping system that works
Bookkeeping needs to become a regular habit. That means sitting down each day to work on it in increments.
The last thing you want to do is procrastinate and leave yourself in the lurch later. Instead, create a schedule of tasks that you can complete on a daily basis to keep your business’s books on track and on the up-and-up.
A consistent bookkeeping habit also comes with longterm dividends. These include understanding your company’s financial outlook each step of the way so that you can make logical decisions based on your company’s financial health needs.
3. Go for accurate documentation
One of the most important aspects of business bookkeeping remains keeping accurate records. How do you do this?
Keep a paper record of every single business transaction that occurs. Then, create a logical filing system to store all this paperwork at your fingertips.
Invest in a solid way to protect that paperwork, too. After all, you need to hold onto necessary paperwork for at least five years past the filing date of each relevant tax year. Make sure your paper trail is solid, verifiable, and easy to follow.
4. Keep your eye on cash flow
When it comes to small businesses, one of their biggest pitfalls remains cash flow. What do we mean by this?
From overestimating future sales volume to impulse spending, locking your cash up in the wrong things can undermine your enterprise. These are only a couple of the worst cash flow mistakes that small businesses make.
When you prioritize bookkeeping you minimize the likelihood of these cash flow problems. Why? Because you have an up-to-date picture of how your business is doing and where there may be potential issues with cash flow.
This gives you the ability to adjust as needed.
But how do you do this? Watch invoices and payments to make sure you’ve got a steady, consistent revenue coming in. Also, pay attention to the expenses you’re paying in terms of when and how much.
Finally, actively save money for rainy days when customer payments come up short or late.
5. Plan ahead
You can’t get where you want to go without a clear plan. This proves no less true when it comes to bookkeeping tips. By planning ahead and remaining proactive, you can head off cash flow problems before they happen.
This requires constant monitoring and a steady eye when it comes to understanding your company’s current and future financial prognoses.
Yes, this means work. But the results will all be worth it. A steady accounting practice will help you plan ahead and prepare for multiple contingencies.
Bookkeeping for small business success
As you can see, bookkeeping for small business doesn’t have to be a complicated or cumbersome process. You do need to develop a consistent method of doing it day in and day out though.
Ready for more tips that’ll put you on the road to success? Check out our 5 quick tips for growing a successful eCommerce business.