Business Topics & Grants

     As a small business owner, you have to wear several hats. From sales and product development, to customer service and hiring staff, to keeping an eye on your small business bookkeeping, you have a full plate and numerous tasks that keep you busy 24/7.

Unless you are a qualified accountant with enough time, the thought of doing the books is daunting. It’s a critical part of your business and, when handled incorrectly, could ruin the hard work you put into your company.

Here are some small business bookkeeping tips to help you work on your business and spend less time with your bookkeeping.

1. Invest in the Right Software – There is a wide array of software and services in the market to help with your small business bookkeeping. Identify the tools you need for your business’s activities and find software that is easy, secure, and comprehensive to make your company’s accounting easier.  Buying an accounting package that is not fully integrated with all modules is usually a mistake with the exception of the payroll module.

2. Make Bookkeeping a Priority – It’s all too easy to put off doing something you don’t like. But bookkeeping should never be put off. Not only is keeping accurate books essential to the financial health and success of your company, it can become much more complicated if it is left unattended.

Make your small business bookkeeping a regular habit, even if you have an accountant. Be sure to consistently check the books and ensure nothing is falling through the cracks.  But bookkeeping is of no value without analysis and exception reporting

3. Stay Organized All Year Long – It can be easy to fall behind with keeping records and tracking your accounts, but the more consistent you are throughout the year, the better the position you will be in when it is tax time.  No later than October for companies with a calendar year end, start the cleanup of accounts receivable and dispositioning of slow moving inventory.

4. Keep Things Separate – Make sure you don’t blur the lines between personal and business income and spending. Even if there isn’t much money coming in, avoid getting into the habit of mixing up your financial resources. Set up separate accounts for your business and you’ll find managing finances and financial reporting easier.

5. Proactively Manage Expenses – Track everything related to your business by using a dedicated business expense card, saving receipts, and setting up a business bank account. This will make it easier to track activity and understand your financial situation.

Proactively plan for major expenses like system upgrades and hardware. Being conscious of big expenses will help you to manage your finances better now so you can comfortably spend on those items in the future.

6. Learning the Lingo – While small business bookkeeping software aims to be user-friendly and easy to understand, you will need to know the vocabulary to communicate with accountants and your bookkeeping team.

7. Use Payroll Software – Don’t waste valuable time trying to figure out your company’s payroll and trying to process paychecks.  Use payroll accounting software to streamline payday processes so you can spend your time concentrating on your business.  There are many good reasons to use an outside service for payroll but be careful there a few services that have many hidden charges.

8. Automating Invoices and Payments – Set up your accounting software to automate invoices and payments. There really is no reason that it should take time to send out invoices or payments. The right accounting software will automate this process.

9. Manage Your Receivables – It’s essential that your business has a positive cash flow in order to succeed, but that can sometimes slow while you are waiting to receive payments. Automate subscription payments and shorten payment terms to ensure you get paid on time.

If there are outstanding payments past their due date, have a set process in place to send reminders, or in the worst-case scenario, begin a debt collection process.

Having a good procedure for handling short pays is critical.  Too often they are not handled when it is easy to resolve

10. Correctly Record Deposits – Always record your business deposits clearly, marking if they are income, loans, or funding. There could be tax implications for different sources of money coming into your business and recording it correctly at the time of the deposit will help you keep your records straight.

11. Get Accounting Help from Someone Who Knows Your Industry – While it’s not completely necessary, it’s a good idea to hire a financial advisor or accountant that really knows the ins and outs of your industry. They can help you set up and maintain the right accounts and processes, especially if there are industry-specific accounting best practices that you are not aware of.

12. Preparing for Taxes – Don’t leave taxes until the last minute. Prepare all year long to avoid any unwanted surprises or costly errors. Your accounting software will provide reporting that will help you stay on top of your finances.

13. Plan for the Future – Establish processes that will scale with your business and anticipate your accounting needs for one to three years in the future. Keep the future in mind to help you build better processes and make better investment decisions on hardware and accounting software.  This should include plans for selling the company.  Having a good accounting software package without unresolved issues especially slow-moving inventory and accounts receivable problems is critical.

by George Schaefer wordpress @ Cmstothemax.com