Bookkeeping is probably not the most exciting part of your day, but it is a crucial components of running your business that cannot be ignored. Whether you hire someone else to so it of you or do it on your own, it needs to be regularly maintained and monitored. By keeping your financial records organized throughout the year you will be able to keep your business focused. Additionally you will be able to assist your accountant when it comes time for the financial year end.
Here are 12 bookkeeping tips to help your business stay on track and flourish:
Find a good bookkeeper
A professional bookkeeper can train you on your software, answer any questions and fix any mistakes that might have been made. Ask for help when it comes to running your business in the best way possible. Your business can only benefit when your financial affairs are all in order.
Invest in technology
Accounting/bookkeeping software will make it easy to be efficient, accurate and up to date. More and more business owners are turning to cloud accounting programs and other desktop software solutions that allow them and their accountant to access financial information more readily.
Keep personal and business finances separate
Never mix the two, it will make your accounting much more difficult to handle. It's a lot easier to keep accurate records if there is only one type of account. There will be no more guess work as to whether it's a personal or business expense. A lot of time will be saved by keeping these accounts separate.
Plan for major expenditures
Set aside money of major expenses like large stock purchases, office equipment and repairs and maintenance. By budgeting for these types of expenses, the funds will be available when you are ready, not when you can afford it.
Set aside money for taxes
Setting aside money each month towards paying your business taxes (sales, payroll, etc.) will mean your obligations will always be met on time.
Keep an eye on your creditor invoices
Late and unpaid bills can affect your business credit. Keep your bills organized and always pay on time. And if you can't afford to pay on time, keep an open line of communication with your vendors.
Reconcile bank and credit card accounts monthly
It is important to do reconciliations for all your bank and credit card accounts and petty cash. You will have accurate and up to date information including profit and loss to be able to better manage cash flow. Another reason is that it will cut down the amount of time needed by your external accountant in preparing your year-end figures for tax and statutory compliance.
Review your cash flow statement as often as possible
The cash flow for most small businesses is constantly fluctuating, which means it needs to be regularly monitored. If you're using and accounting software program, it will be easy to generate and review your cash flow statements. This was you can avoid insufficient funds charged by researching financing options in advance and making sure all of your debts are covered.
If cash is used, it is hard to keep track of the spending. By using a debit or credit card you can keep track of the amounts spent, where it was spent and when it was spent. This makes tracking expenses much much easier....But remember, you still need to keep your receipts.
Schedule a set time each week to enter all invoices
Make sure that there is a portion of your weekly agenda designated specifically on managing your finances and updating your records. Depending on the volume of invoices you receive, this could be easily accomplished in 30-90 minutes per week, especially if you are using and accounting system with quick entry fields and handy drop-down boxes.
Regularly check up on your debtors
Make sure you stay on top of your accounts receivables so that you are receiving payments for customers when they are due. Regularly running an accounts receivable report and issuing monthly statements to customer will help you stay on top of monies that you are owed. This will also assist with your cash flow.
A good filing system
Maintaining a good filing system is imperative in keeping your paperwork organized. You will always be able to find that paper when you need it. Or go one step further and create an electronic filing system and do away with those papers altogether.
By keeping your records in check, you will be able to spend less time on business finances and more time on growing your business.
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