Every business owner needs a solid bookkeeping system in order to stay in business. No matter how small your business is, you should make sure that your books are updated, accurate, and readily available as it provides you with crucial information about your business’ overall financial performance. Check out these 5 bookkeeping tips for small businesses that will help guide you along the way.
Separate business and personal
Don’t wait until your business is booming to properly set up your bank accounts. Once things start to get busy, it can be an absolute nightmare trying to untangle business and personal transactions, and the last thing you need is the Internal Revenue Service in your personal accounts. Set up your business bank accounts and credit cards right from the start and make sure all business transactions are processed through those accounts. In the long run, this will save you a great deal of time and energy when sifting through your expenses, because you won’t need to filter out any personal purchases you have made. Doing so will help you quickly determine your cash flow, as you can easily identify your income versus your expenses.
Prioritize your books
As a new business owner, you have a million and one things to do. While it can be tempting to avoid your books and focus on the actual running of your business, it’s best to prioritize your books. Make time from the very beginning to keep control of your paperwork, and you’ll be thankful in the long run, particularly during tax time. Schedule time to categorize the transactions and match your deposits and expenses to your bank statements. If you wait too long to do your bookkeeping, you may forget what certain transactions were for, making it necessary to go through your receipts one by one. It’s far easier to keep to a schedule which will ensure that the bookkeeping process is as efficient, painless, and accurate as possible. If you are struggling to make time for your books, or because you just aren’t good at it, it may be worthwhile hiring the services of a bookkeeper to help you.
Choose a reliable bookkeeper and accountant wisely
If you know from the start that bookkeeping is not your thing and you have no bandwidth to deal with day to day bookkeeping, it’s best to hire a professional and reliable bookkeeper to help make your life much easier. In addition, choose your accountant carefully. Don’t just look for the lowest fee. It’s much more important to get someone with not only the experience to assist you in finding every deduction and tax advantage available, but someone who also will be available to spend time with you, learn about your business, and teach you how to get the most out of your business. Good bookkeeping shouldn’t be just about knowing what you’ve done, it should be about helping you know where your business is going. Work with your accountant to build a budget and revenue forecast.
Classify your employee status correctly
Businesses usually have full-time staff, part-time staff, contract workers, or a combination of all three. It is crucial that you properly classify employees and ensure that you remain compliant with federal and state rules to avoid costly and disruptive mistakes at tax time.
Go Online with Your Payroll
Make it even easier to get a handle of your payroll at any time. Ditch the paperwork and go digital. Too many local businesses are still using paper to manage their hourly employees. By using a software solution, business owners can eliminate paperwork, store their employee records in the cloud, and import hours directly into payroll and accounting software. This makes running payroll a breeze, simplifies bookkeeping, and saves you hours each week for busy owners.