Five Bookkeeping Tips

Posted by Ankit on March 14th, 2020

Five bookkeeping tips you need to know for your small business. It’s never too late to start organizing your books. Being organized and keeping on top of your bookkeeping is essential when running a business. Here are our top five tips to help you manage your books more effectively.

1. Schedule Time for it

Schedule a time every week or month to spend time going over your bookkeeping. It will save you time in the long run and you can be stress-free at the end of your financial year!

If you outsource your bookkeeping, it’s still a good idea to schedule time for your books. By checking on your bookkeeping you are aware of your company standing and can help you plan for the future.

2. Get Organized

Virtually every business owner would agree that having well-organized books is important, but the process of actually getting your books in order can be a challenge. This task should be accomplished right from the beginning to save a lot of headaches and mishaps down the road. By being organized you can avoid tax penalties, get financing easier, and well-kept books will make it easy for a business owner to perform basic financial analysis to answer key questions, including:

• Are you profitable?
• Are your expenses too high?
• Is the business on track for growth?

3. Separate your finances

It is best practice to open a business bank account when you set up your company. Having a separate bank account and credit card for your business will make it easier to navigate your records.

By having a separate bank account for your business you can see any issues in cash flows. You can also claim tax deductions for business costs more accurately.

4. Stay on top of Accounts Receivable

The best way to stay on top of your accounts receivable is by setting standards early in your business.

To take control over accounts receivable you should:

1. Be clear on your invoice statements.
2. Communicate the consequences if payments are missed.
3. Follow up with your clients and send them reminders.

If you don’t take control of accounts receivable, your business is at risk of being in a negative cash position.

5. Choose a Bookkeeping Software

One of the most important bookkeeping tips is to incorporate a bookkeeping method to track income and expenses. There are various cloud-based versions of inexpensive software. QuickBooks is the most popular. Good bookkeeping ensures that you have the numbers and data that you need to help your accountant make predictions about your business’ future, and diagnose your business’ financial health. Online bookkeeping uses software that takes care of most of the calculations and data entry for you. A program like QuickBooks cloud accounting software, for example, can help you track income and expenses much faster than you could with a traditional ledger.

However, it is advisable to consult a trained accountant before buying any accounting software. This is due to the fact that some are very complicated and might be difficult to use.

If you would like to talk with a trained professional, schedule your free business consultation with an expert at Accounting District today. We would be happy to advise your business on all of your bookkeeping needs.