Accounting can be one of the toughest activities for small business owners, especially for those who don’t have a background in bookkeeping. Following a few simple bookkeeping tips throughout the year, however, can make it much easier to track expenses and file taxes when the time comes.
5 Bookkeeping Tips for Small Businesses
The first step is to look ahead at any recurring expenses and potential needs for your small business and plan ahead. If you have a major expense on the horizon, set aside funds every month to cover the costs. It’s also beneficial to set aside some money for those unexpected maintenance issues or repairs. The key is to be proactive rather than reactive.
Use a Reliable System
Bookkeeping software for small businesses has come a long way over the past decade, and some programs make it much simpler to input expenses and to monitor cash flow. QuickBooks is a popular option for many small businesses, and the cloud-based capabilities make it easy to access or share important financial information without heading into the office.
Make a Schedule
Don’t put your bookkeeping off until the end of the year. This will result in a scramble come tax time when you’re trying to track down receipts and invoices that may be months old. Schedule time each week or month to complete bookkeeping activities on a regular basis, and try your best to stick with the schedule.
Leave a Trail
Stay away from using cash to pay for business expenses, since it can be very difficult to track. It’s best to use a dedicated business credit or debit card to leave a trail of your transactions and avoid any issues with write-offs and taxes.
Some vendors are notorious for paying bills late. Keep a close eye on your invoices to determine your cash flow and spending power. This also gives you the option to send reminders and follow up on outstanding bills before too much time passes.
Bonus Tip: Recognize When You Need Professional Help
Small business owners are workhorses, and sometimes a bit stubborn to ask for help. That being said, if your bookkeeping and accounting activities are taking over too much of your time, you may benefit from bringing in an expert. The time you save can be applied to other aspects of your business that you really do enjoy.
Are you tracking profitability for your small business? Download our free checklist to find out how!