Bookkeeping is a big concern for small business owners as many don’t have past experience managing the books. However, being smart about how you deal with it will save you a lot of time, effort, and headaches. In this article, we’ll cover 5 tips to help you manage your books.
Manage Your Books With These Tips
1. Keep all of your business records organized.
If you want your business to run efficiently and smoothly, you need to keep a record of every part of your business. Imagine if a client refuses to pay and it leads to a court’s summons. Having a paper trail of your records can help support your case.
Receipts for all of your expenses should be kept as well. You don’t want to lose track of this because there are certain expenses you can offset (depending on your location and circumstances), which will give you a refundable amount at the end of a financial year. Your income should also be properly recorded to ensure that your balance sheets are – well – actually balanced.
Tip: Make sure that you have at least two copies of your records (i.e. hard copy + cloud backup).
2. Utilize software to expedite processes.
As mentioned above, you should have a backup copy of your receipts – ideally on the cloud. This gives you a guarantee that no matter what happens – such as the hard copies getting lost because of unavoidable circumstances – you still have records you can use when it comes time to file your taxes.
Using a receipt scanner app will help make this process easy for you or your bookkeeper. Using a mobile phone, you can snap a photo of your receipts and a receipt scanner app will scan, transcribe, and store receipts for you. No more manual inputting! No more lost receipts!
3. Find an accounting/bookkeeping software that works for you.
A lot of small businesses find that Excel helps them manage their books, but many feel limited with it. The good news is, there are a lot of powerful accounting software available on the market these days that are fairly inexpensive. Using an accounting software will help you monitor and analyze your profits and losses — making it stress-free for you to review your business’ finances.
Some software even has features that can automatically sync with your receipt scanner app, track payments, credit cards, and bank accounts with only an initial setup required — minimizing the need for any repeated manual actions. You can also find a software that is programmed to differentiate incomes from expenses. All of these features will help you save a lot of time and reduce the risk of human errors.
4. Hire a local bookkeeper.
It is understandable why most business owners don’t enjoy bookkeeping, as it takes a lot of work and time. A good way to free your mind of this overwhelming task is to hire a freelancer – like a college student who’s looking for internship opportunities or even a seasoned bookkeeper offering their services for reasonable rates. Many students majoring in accounting are looking for internships and they may even receive class credit for them. This may cost more than doing the work yourself – but it frees up a big chunk of your time which you can use to work on more important aspects of your business, which can lead to growth and more revenue.
5. Don’t put off bookkeeping to the last minute.
Simply put – the more you neglect the task, the more time it will suck when it piles up. Imagine trying to figure out what an expense is and making it fit into your accounting records 12 months after you paid for it! Also, cramming may make you miss out on a lot of things and balancing your financial statements can be extremely challenging then.
So the sooner you apply the tips discussed above, the faster you will be in making sure that your bookkeeping is right on track. Even if you have an accountant who helps you when it’s time to file your taxes, you should keep in mind that bookkeeping is a task that needs attention all year round. Despite this, with smart bookkeeping, it can be managed easily.
Benefits of Getting Control of Your Bookkeeping
- Save money – actively planning and keeping track of your expenses constantly will help you save more on taxes.
- Reduce stress – your mind will be free from worrying about your books the entire year, knowing that they’re being taken care of.
- Make more informed financial decisions – since you are able to track your income and expenses immediately, you can make better business decisions when the need calls for it – saving you from having to wait an entire year before it’s too late to pivot.
Bookkeeping does not need to be overwhelming. Our tips are designed to help you manage your books and allow you to have a more organized and less stressful financial life.
Remember: being smart about your bookkeeping is not just about tax deductions; it also allows you to have the power to make informed decisions quickly and effectively.