7 Bookkeeping Tips for Small Business Owners
Small business owners take on many roles – some of which they didn’t plan. The largest role is bookkeeper. If it’s not in your budget yet to hire someone, or even if it is, you must be organized and ready for the task ahead.
Here are 7 small business bookkeeping tips business owners in any industry can use.
1. Keep careful records
We can’t stress this enough. You need proof of your expenses for taxes and you need records to create your business reports. Keeping careful records is the only way to avoid wasting time searching high and low for what you spent and what you’re owed. It also ensures you get every tax write-off and deduction you deserve.
2. Open a separate business bank account
Don’t mix your personal and business income. Even if you think you keep careful records, it gets messy. Find a free business account with no minimum balance required and use it for your business income and expenses. You’ll have an easier time tracking your cash flow and creating your business reports.
3. Stay on top of accounts receivable
Businesses can’t operate without cash flow. Stay on top of your accounts receivable. Set a specific time each week or bi-weekly to follow up on accounts that fell behind. If you use invoicing software, you can also set up automatic reminders in certain intervals to remind clients of their bills.
4. Set aside time to do small business bookkeeping
Don’t make bookkeeping an afterthought. Set aside a specific time each week or month to go over your cash flow, reconcile your bank accounts, and get an overview of what’s happening in your business. Set up an hour or two at a time that you don’t have any other distractions to ensure you get the full picture.
5. Know your business’s season
Pay close attention to the cash flow trends your business has. Are there certain times of year cash flow is down? You may need to cut back on expenses during those times, but you can also set aside money from times when cash flow is much higher. Preparation is key and the only way to know when it will happen is to watch your business’s cash flow.
6. Automate as much as you can
Small business bookkeeping can be time-consuming and tedious. As much as you can automate, do it. If your accounting software links to your bank account, you don’t have to worry about entering every cash inflow and outflow. Also automate invoicing, follow-ups, and reminders for yourself to pay your accounts payable.
7. Outsource your small business bookkeeping
If bookkeeping isn’t your thing, don’t worry. Why take away time from what you do best to struggle? Instead, outsource to the pros. You’ll save time, which is more valuable than money sometimes, allowing you to focus on what your business really needs.
Final Thoughts
Small business bookkeeping is just as important as marketing and running your business. Without cash flow, balanced bank accounts, and knowing where your money is coming from, it’s hard to run a successful business.
Use these top bookkeeping tips to keep your business on track and profitable!