Bookkeeping is an essential part of running a successful business.
Without knowing how much money you're making or spending, there is no way for you to measure the performance of your business.
In this article we will discuss different bookkeeping tips to help you stay on top of your small business.
Small Business Bookkeeping Tips
Keep Your Personal Expenses Separate From Your Business Expenses
Mixing your personal and business expenses can lead to inaccurate financial data which becomes a problem when your are preparing financial statements and evaluating your business' performance.
Keeping your personal expenses in a separate bank account will also make your bookkeeping process much more simple as you won't have to constantly sort through transaction trying to decide which was for the business and which was for personal use.
Use Small Business Bookkeeping Software
Traditionally, all bookkeeping was either done by hand or with the help of a spreadsheet.
However, in the past 20 years the use of bookkeeping and accounting software has become the gold standard for completing regular bookkeeping tasks.
Bookkeeping software is purpose-built to make it as easy as possible to stay on top of your books.
The three most popular pieces of accounting software available today are Quickbooks, Freshbooks, and Xero.
Keep Track of Cash Payments
Anytime a customer pays with cash it is vital that you have a system for keeping track of when your were paid and what your were paid for.
Sometimes payments can get lost within cash-heavy businesses which can lead to inaccurate financial data.
Having a system in place to deal with the tracking of cash payments is crucial to the success of your small business.
Become Familiar with Financial Statements
Financial statements are documents that are prepared using the financial data within your books. It is the job of the bookkeeper to properly record and categorize every single transaction that flows through your business.
At the end of each period (usually each month) it is important to analyze these financial statements, such as the income statement and the balance sheet, in order to fully understand the financial health and performance of your business.
As a small business owner, it is highly advised that you spend some time familiarizing yourself with these statements so that you can feel confident when evaluating the finances of your company.
Send Invoices Immediately After Work is Completed
In order to ensure that your are paid as soon as possible after you have completed a job, you must send your invoice to the customer immediately.
Sending an invoice immediately after work has been completed also helps you with invoice tracking as there is no delay between job completion and requesting payment, leaving little room for errors.
Revenue will be the fuel for your business, therefore it should be your upmost priority to collect all payments in-full and in a timely manner.
Outsource Your Bookkeeping When it Becomes Too Complex
If your business is rapidly growing then it may be time to reach out to a professional bookkeeper to take over the books.
As mentioned early, bookkeeping is an essential part of running any business but the books are only useful to you if the financial data within is correctly and accurately recorded.
If you ever feel yourself starting to slip up in regards to your bookkeeping responsibilities as a small business owner, then it may be time to bring in some outside help.
Luckily, there are outsourced bookkeeping firms, such as Noon, with teams of expert, certified bookkeepers ready to help you with any bookkeeping challenge you may be facing.
Set Reminders For Important Deadlines
As a small business owner I'm sure you're well aware of all the different dates and deadlines you need to keep straight in your head in order to avoid fines or penalties.
Simply setting up automated reminders for each important deadline you face will help immensely with your organization and will allow you to clear your head for other important information.
Budget For Tax Payments
Taxes are unavoidable in business and in life.
Therefore, it is necessary to plan for them as best you can in order to decrease the likelihood of any issues arising during tax time.
Be sure to contact your accountant to come up with the best possible tax plan for your unique business.
Small Business Bookkeeping Tips: Conclusion
Running a small business requires a great deal of determination, focus, and knowledge.
A large part of running a successful small business is understanding your financial position and being able to track how much you earned versus how much you spent.
When you are able to stay on top of your finances your business begins to run much more smoothly.
Some of the best ways to stay on top of your finances and your bookkeeping is to keep your personal bank account separate from your business bank account, be sure to keep track of all cash payments, and become familiar with financial statements so that you can properly analyze the financial health of your business.
How Noon Can Help Your Business Thrive
Noon Bookkeeping is an outsourced bookkeeping solution for business owners consisting of a team of certified, expert bookkeepers ready to help you organize the finances of your business.
Noon can handle all of your bookkeeping in one place so that you can focus on running and growing your unique business knowing that we’ve got your finances handled.
Learn more about how Noon can help you take control of your finances.