Unless you’re one of those folks who loves working with numbers, balancing the books is never a fun part of having a business.
It is, however, an extremely important part of your business…
This is especially true for small businesses, where everything is done in house and even the smallest of errors can have a major impact.
With this in mind, small business owners should consider the following tips to make bookkeeping easier:
- Maintain regular records – As with most things in life, it’s easy to let your business books get away from you. Because sitting down and going over the books isn’t pleasant, most of us tend to avoid it, but the longer you avoid it, the more complicated it becomes. If you keep regular, daily records of all transactions then you’ll have a much easier time of it when you need to do the end of accounting period number crunching.
- Use the right accounting system – there are two basic choices for most small businesses: cash-based or accrual. In most cases, cash based, where you record income when you receive it and expenses when you pay them, will work just fine. But some businesses will actually be better off using the accrual method, where you record income and expenses when they happen, not when you actually receive or pay them. Knowing which system to use and sticking with it from the beginning can help to make bookkeeping easier.
- Stay on top of your bank statements – another real time saver when it comes to bookkeeping is making use of those monthly bank statements. If you keep a careful eye on your bank records and where your money is, you’ll have less of a chance of missing something when you’re balancing the books at the end of an accounting period. It’s a good way to keep yourself in check.
- Be careful with checks – checks should be treated the same as cash. Whether you’re writing one or receiving one, be mindful of what you’re doing. Make sure you make out all checks accurately and record them all as they come in or go out. And file all paperwork properly so it can be easily accessed. Again, this will help to keep your records clean for that all-important end of period computing.
- Keep all financial records in order – the neater your financial records, the easier it will be to track down any potential problems should they come up. Keep invoices, checks and any other paperwork in numerical or date order and make sure everything is filed properly. Also, doing all of your bookkeeping on the computer can make a huge difference. There are many easy to use bookkeeping programs such as QBO and Xero available today for just this reason.
Again, bookkeeping may not be pleasant but if you follow these tips it shouldn’t have to be a chore.
You’ll be able to rest easy knowing that your business records are in great shape and that you can track your income and expenses at a glance.
This way you can watch your small business take a big chunk out of the competition.