Whether you own a small retail shop or a major car rental service company, being a business owner is no easy job. You have a lot on your plate to do on a day-to-day basis including managing your business operation, working with customers, networking and keeping everything running smoothly. This often gives you little time to pay attention to other important aspects of running a business and one is managing your books. Generally speaking, every business owner knows that having smart money management is key to success, no matter how much revenue your company brings in. Adopting some good bookkeeping habits can protect you from costly errors that may come along if you neglect this part of your business. Luckily, keeping your books straight doesn’t require having a master’s degree. All it takes is little time, the right tools and strategy to get your bookkeeping done quickly and accurately. Here are five essential tips to help you succeed.
Choose your bookkeeping method
The first and most important step you should take is to decide on the right bookkeeping method for your business. Typically, owners choose between using spreadsheets and accounting software. Bookkeeping that uses spreadsheets usually involves using a program like Microsoft Excel, but there are entrepreneurs who still use the old-fashioned pen-and-paper method. However, since we live in a digitalized world, many business owners turn to online bookkeeping
using accounting software to store their records. This allows you to even sync your bookkeeping software with your business bank account and always have accurate, up-to-date records.
Keep personal and business finances separate
A common mistake some business owners make is they interconnect their business and personal finances. Doing so comes with a few headaches and risks, including spending countless hours meticulously sifting through various bank transactions and trying to remember which expenses are business-related and which are personal. This practice can also cause serious problems with the IRS. Therefore, to save yourself a lot of time, effort and government problems, you should always keep your personal and business finances separate. This will additionally allow you to build better business credit and lower the rates on your insurance policies.
Perform regular financial checkups
Postponing your books too long increases your chances of ending up with bounced checks, overdue invoices and figures that don’t add up. That’s why it is important that you perform regular financial checkups, for example every week, to make sure everything is in perfect shape. For a more thorough checkup, you should take an in-depth look at your bookkeeping and accounting records at the end of each quarter. This will give you the ideal opportunity to look for trends, such as whether you have experienced a decline or growth in sales, what your year-over-year revenues are and if there has been an increase in late-paying customers.
Set reminders for important deadlines
As a business owner, it is easy to get caught up in your day-to-day tasks trying to manage your company efficiently and successfully. This can cause you to lose track of some important deadlines you have such as paying GST, payroll and other regular business invoices, and even leave you with a fine or an unhappy partner. Therefore, to avoid missing these deadlines and protect yourself from further issues, you should set reminders for yourself. You can do this either by writing notes on your smartphone or by using your online email calendar.
Hire a professional bookkeeper
If you don’t have the time to do the book yourself or you simply stress out over the idea of handling the finances on your own, you can always hire a professional bookkeeper to do the job for you. In fact, outsourcing to an experienced bookkeeper offers a few benefits including saving you valuable time and money, ensuring your books are up-to-date and well organized and meeting all of your compliance activities. This will further give you more time to make other important business decisions as you will have a much clearer picture of how your company is performing financially.
No matter the size of your business, bookkeeping is one of the most important responsibilities you have as a business owner. By properly organizing your records, you get a reliable measure of how your company is performing. This will further allow you to make decisions for growth and drive your business to greater success. Whether you decide to do it yourself or hire a professional bookkeeper to do the job for you, make sure you follow the tips from our post to do your books properly and efficiently.