Businesses with no proper bookkeeping standards tend to sink fast. You can protect your business from unwholesome financial practices and government sanctions by organizing your bookkeeping operations the right way. This guide covers the 7 tips to bear in mind when organizing small business bookkeeping.
Keep Personal And Business Finances Separate
The best way to manage your finances is to separate personal and business finance. In fact, it is best to have separate bank accounts for your personal and business activities. Running your private life and business activities from a joint bank account will cause you to lose track of financial dealings. So keep your personal funds separate from business funds.
Keep And Record All Financial Dealings
Learn to keep proper records of all financial dealings by organizing invoices, receipts, expenses, and donations among others in their proper books. Accurate financial records will demonstrate the financial health of your business at a glance, and it will facilitate tracking funds and purposes for which they are utilized.
It might be helpful to sort your financial operations using labels such as accounts payable, accounts receivable, assets, liabilities, depreciation, sales, revenues, payroll, and general expenses.
Set Your Tax Budget Aside
Save a percentage of your business revenue and funds for tax purposes. It is like putting money away for the rainy days. When you budget for your taxes and frequently set money aside for the purpose, you will not run helter-skelter when the taxman comes knocking. When your tax is ready before the Tax Day, it will enable you to file your returns without stress or penalty.
Leave An Audit Trail
Whether you are managing your business bookkeeping manually or digitally, people must be able to examine your financial books and assess your business health at a glance. With a good audit trail, hired accountants will be able to audit your accounts and proceed with bookkeeping where you left off. To meet government regulations and oversight, it is always a good idea for your financial books to be comprehensive and transparent.
Track Your Expenses And Revenues
You must track your business expenses and revenue by maintaining a daily record that reflects all financial activities. Recording all revenues will give a clear picture of your cashflow as well as monies owed you (receivables); and it will also present you with a broad overview of your account payables – bills and debts that are due to be paid to customers and utility companies.
Digitize Your Bookkeeping Process
There are hundreds of bookkeeping software and mobile apps that can help you digitize your accounting processes easily. Instead of dealing with stacks of papers that can be destroyed in any unfortunate incidents, you can opt for software and apps that enable you to save your accounting and bookkeeping operations online in the cloud.
The software and apps you choose to automate your business finances must have the requisite storage, accessibility, security, and features that streamline your accounting responsibilities. The desired digital tool must cover revenues, expenses, payroll, taxes, and general ledger among others. Take advantage of new technologies to move your business forward.
Set Important Reminders
If you are prone to losing track of time and important deadlines, setting reminders for your business and financial obligations would go a long way to helping you succeed. You must set important reminders using digital calendars and diaries to keep on track of upcoming events, tax payments, business meetings, and debt clearance among others.
It is never a good business idea to miss tax deadlines, conference dates, employee compensations, and business acquisitions among other things. You cannot rely on your memory or personal aides to remind you of everything, utilize digital tools to remind you of important dates and appointments.
Organizing small business bookkeeping is important for your commercial enterprise. The success of any entrepreneurial startup depends to a large degree on small operational details such as keeping tabs of incomes, expenses, payroll, and other accounting practices. It is part of the system that must be set up to streamline your business operations and keep things easy and functional for everyone.
Bookkeeping records are important for all small businesses and there is a better way to organize them for effective results and growth.