Keeping accurate financial records for your business is essential. If you’re an entrepreneur who has struggled with this aspect of running a company, you’re not alone. Many small business owners have had the same experience. Bookkeeping is a skill worth mastering, though, because in the long run, a good system can save you money, time and frustration. You might even find that a streamlined process will highlight strengths and weaknesses in your accounts and be the catalyst for new approaches to growing your firm. Here are ten things to consider when keeping your books.
- Try online services: Online and cloud-based accounting can guide you through the process. Look for a package that is designed for your size operation. Accounting in the cloud has the advantage of allowing you to check your books from anywhere that has an internet connection.
- Get advice: Find a qualified accountant or bookkeeper to answer your questions. Someone with experience will be able to help you with problems that crop up and avert mistakes before they get out of control.
- Don’t mix company and personal finances: Even if you’re a one-person operation, you’ll want a dedicated system for your business records. Having personal expenses mingled in with your company’s records will create confusion when you try to analyze your earnings and expenses.
- Planning expenditures: Budget for upcoming expenses such as supplies, inventory and maintenance. Having an idea of what it costs to run your business will help you decide where you need to spend or cut back.
- Plan for taxes: Taxes are inevitable. Keep good records so you’ll be able to estimate quarterly or year-end amounts.
- Keep track of debt: Don’t let late or unpaid bills get out of control. You don’t want debt to alienate your vendors or ruin your credit rating.
- Reconcile your accounts: Reconcile your bank accounts at least once a month and check on them more often than that.
- Don’t use cash: Cash is difficult to track. Credit and debit cards leave a trail and will help you see where you’re spending money.
- Set aside time to review your books: Make reviewing your books a part of your weekly routine. A regular overview of your accounts will help you stay organized and catch potential problems.
- Have a system for tracking accounts receivable: Stay on top of billings. Run a report monthly so you’ll know who owes you what.
Minding your books is not glamorous, but it will make your small business run so much more smoothly. Dive into your accounts regularly and stay in control of your finances by streamlining and organizing your bookkeeping practices.