There is a never ending list of things to do in your business and for your business. Bookkeeping is one of those tasks that you must do for your business in order to evaluate the financial health of your business.
Below are six helpful tips to make your bookkeeping easier to manage.
Don't go it alone.
Bookkeeping is the process of recording the day-to-day financial transactions that provide the foundation for your future business and income tax reporting. If you are just starting out in business, I highly recommend hiring a qualified bookkeeper to setup your accounting system, create the chart of accounts, sync your bank/credit card accounts, and enter beginning balances, fixed assets, etc. Additionally, a good bookkeeper will give you some pointers and create a process for you to follow if you wish to do the books yourself.
Use accounting software.
Even the simplest of businesses should use accounting software to record their business income, expenses, payroll, and receivables. QuickBooks Online is my choice for all small businesses. They offer various subscription levels to meet any budget and they make the software easy to use.
Take advantage of automation hacks as well as cloud storage to keep receipts, bills, and other important records for your business and make tax time prep easy peasy!
Invest in simple bookkeeping processes.
Take time to create bookkeeping processes that work for your business. Additionally, you should create a daily, weekly and monthly bookkeeping routine along with a comprehensive checklist so you don't forget anything throughout the year!
Find a safe place to store your financial documents.
The best way to prepare for tax time is by having all of your important tax-related documents kept in one place for easy access. Create a storage system-preferably a digital one-and clearly label each folder for the corresponding documents.
Documents including receipts, invoices, mileage logs, employee pay records, and furniture, equipment, or large purchases should be saved for tax time. These key documents along with your financial reports will be used by your CPA or tax preparer.
Mind your cash flow.
Cash flow can make or break your business so it is imperative to monitor the inflow and outflow of money. Cash inflow is generated from cash sales and customer invoice payments. Cash outflow is money leaving your business when you make payroll, pay suppliers, rent, loans, and taxes.
Obviously, you need more cash flowing into your business than flowing out. Factors such as timing and seasonality can play havoc with your money. It is a good idea to create a budget and forecast expected sales and expenses for the each week and month. To sum it up, cash flow is essential to the success of your business and requires advanced planning, savings and possibly a line of credit.
Separate Personal Finances from your business.
Utilize separate bank accounts and credit cards for your personal finances. You can avoid having to sift through statements and receipts at tax time, which will save you time and lots of energy!
If you have any other helpful tips that you use in your business, please share them in the comments below.