Best Bookkeeping Practices For Better Business

As a small business owner, your main output shouldn’t be anxiety, especially when it comes to bookkeeping. Unfortunately for most, tax time seems to be the only time this vital practice becomes a point of focus. Well, we think it’s not that people don’t want to manage their books efficiently; they just don’t always know the best way to get started. So, here are a few helpful tips to help you tighten up your bookkeeping game.

• Perform Regular Financial Checkups and Check-Ins

Putting off bookkeeping can often snowball into big problems, including unbalanced accounts, bounced checks, and overdue invoices. Reviewing your books weekly can help you avoid disaster and provide confidence during your business endeavors. Then, at the end of each quarter, take a deep dive into your records. See if you can identify trends or cycles for better planning down the road.

• Keep Your Personal And Business Finance Separate

Mixing personal and business expenses can cause problems at tax time, and if it can be helped, you should avoid introducing your personal funds to your business objectives. When you launch your startup, open a separate bank account and credit card, both solely dedicated to your business. Organization like this builds confidence, not to mention your business’s credit rating.

• Utilize Your Accountant Appropriately

It’s a common misconception that an accountant is a bookkeeper. Bookkeeping is the direct record of all purchases and sales that your business conducts. An accountant takes a subjective look at what that collected data means for your business. The better the bookkeeping, the more accurate your accountant can be. Ask your accountant if off-the-shelf accounting software is right for you and suggestions on how to use it. 

• Choose Bookkeeping Software That Is Right For You

Your business needs are specific, and your bookkeeping software should be too. Most bookkeeping software packages offer different levels such as Cashbook, Ledger, Inventory, Foreign Currency Transaction, and Point of Sale. At a minimum, you should be implementing and/or utilizing Cashbook.

• Automate For Up To Date

Data entry isn’t the only way to keep your business’s financial records up to date. There is now cloud-based bookkeeping software that can link to your online business bank account for up-to-the-minute accuracy of your transactions. A bonus of utilizing this type of software is that vital financial data is backed up in the cloud, should your computer go down.

• Use Software To Track Employee Time

Timekeeping should be easy for you and your employees. Cloud-based software is available so that employees can clock in from most devices. This application can help you keep track of individual employee’s overtime and paid leave, among others. Be sure to check that your current bookkeeping software doesn’t already offer a time tracking extension or application. This type of software can also help make payroll a lot easier.

• Record Business Expenses

Tax codes change all the time, and you’ll want to stay in touch with your accountant about what kind of deductions you can make. Help keep your records tidy by scanning and digitizing receipts. Simplify even more by utilizing a business credit card for expenses. That way, you get a monthly statement that you can access and download online.

• Closely Monitor Accounts Receivable

Cash flow is the lifeblood of your business, and when customers are behind on payment, your business can be held at a standstill. Stay on top of payment due dates and reach out with subtle reminders when payment is overdue. A helpful tip for customers having financial difficulty: suggest a payment plan so that at least some of what you’re owed is being put back into your business.

• Turn Tax Deadlines Into Tax Timelines

Tax time shouldn’t sneak up on anybody. Follow the IRS website’s tax calendar and plan ahead so you can pay on time to avoid late charges and prepare emergency funds in case of fines. By syncing up your work calendar with key IRS dates, you can be given reminders weeks in advance. Proactivity is for pros, and planning like this also provides a reminder to reach out to your accountant with questions ahead of the tax rush.

We hope these tips are just the tip of the iceberg for you as you develop more helpful and proactive strategies of your own. Need an accountant’s POV? Schedule a free consultation.