Regardless if you love poring over spreadsheets or bookkeeping really isn’t your thing, it is one of those tasks that no business owner can avoid — unless you hire a Certified Public Accountant (CPA) to do it for you. Maybe you are considering hiring a CPA in the future, but aren’t quite there yet — and that is okay. That is why in today’s blog, our experienced CPA team at Innovative Accounting wants to provide you with 10 tips for better handling your small business bookkeeping. If you have any more questions or would like to speak with an experienced CPA for further guidance, reach out to Innovative Accounting today.
10 Tips for Small Business Bookkeeping
Tip #1: Separate Your Business and Personal Finances
This is a common mistake in small business bookkeeping, and will only cause a huge headache for your business in the future. It is suggested to open up a business bank account as soon as you decide to go through with your start-up and be sure to get a separate business credit card. This will not only separate your accounts, but it will also help your business build its own credit rating.
Tip #2: Select the Right Bookkeeping Software
The specific type of bookkeeping software you need will depend on what you and your business need out of it. An excellent and affordable option is Intuit QuickBooks, which allows you to keep track of many different aspects of your business’s finances, such as project profitability, cash flow, income and expenses, bill management, invoicing and payments, and more. There are also a variety of different plan options to choose from, which makes it easy for you to find exactly what you need.
Tip #3: Automate
Be sure to do this whenever you can. Utilize bookkeeping software such as QuickBooks and do your business banking online. This way, you can sync up your bookkeeping software with your business bank account so that you will always have accurate records. Plus, with QuickBooks, your critical financial information is backed up safely.
Tip #4: Consult With a Professional
It is never a bad idea to talk with a trusted accountant to figure out if you can use off-the-shelf accounting software or if you would benefit from customizing it. An experienced accountant will be able to both offer you advice and help you with setting it up and teaching you how to properly use it.
Tip #5: Perform Financial Check-Ups
When business owners put off bookkeeping for too long, they often end up with bounced checks, overdue invoices, or figures that don’t add up. This is why it is so important to go over your books weekly in order to make sure everything is in good shape.
Tip #6: Perform a Quarterly Review
Be sure to take an in-depth look at your bookkeeping and accounting records at the end of each quarter with a quarterly review. Keep an eye out for trends like growing or declining sales, year-over-year revenues, increases in late-paying customers, and so forth. If you are unsure about how to perform this task or would like assistance with doing it, it is best to talk with an experienced CPA who can give you a hand and give you an in-depth explanation of the process. This will help you to be much better prepared for future capital needs, like if you need to move into a bigger space or purchase new equipment to run your business.
Tip #8: Keep a Close Eye on Accounts Receivable
Your business’s cash flow can dry up fast when customers don’t pay on time, which is why it is so important to keep a close eye on when your receivables are due and contact late-paying customers right away in order to give them a friendly reminder and help them along. For customers who are struggling with their finances, you may be able to set up a payment plan to at last get a portion of what you are owed.
Tip #9: Be Sure to Stay On Top of Tax Deadlines
Be sure to plan ahead and set aside money for any anticipated tax bills so that you don’t get caught short, and pay on time so that you don’t face any fines.
Tip #10: Be Sure to Correct Any Errors as Soon as You Find Them
If you come across any discrepancy when you are looking over your books, be sure to resolve it as soon as possible — no matter how small of an error it might be — by finding the source and correcting it. If you allow it to carry over into the following months, it will only become bigger and more difficult to correct. Ensuring that your books are accurate and up-to-date from the start will help set your business up for success in the long run.
Tip #11: Don’t Be Afraid to Outsource If It Becomes Too Much to Handle
Our team at Innovative Accounting can help you with all aspects of small business bookkeeping and accounting. We also offer a variety of other additional services such as pre-year end tax planning reviews, sales tax management, receipt bank/receipt posting, cash-flow forecasting, and more. When you work with an experienced bookkeeper/CPA, you will come to find that bookkeeping is much more cost-effective and accurate. Sometimes taking the step of hiring a professional CPA is exactly what you and your business need to get off the ground running — give us a call today to learn more about what we can do for you and your small business.