When you own a small business, you're likely going to want to do a lot of the heavy work yourself. This is important, too, as you also need to have a good sense of how all aspects of your operations are working in order to properly assess the direction you have to take for your growth. However, there are also parts of your small business that you should be more intimately aware of, such as bookkeeping, in order to make sure all aspects of your finances are properly cared for and arranged. How do you do this, though? What are bookkeeping business tips for small business owners that you could learn from?
Just because you're a small business owner doesn't mean you shouldn't focus on your operations, however. In fact, your small business has a huge role in any economy - and as such needs precise levels of control and checking in terms of operations, especially with your books.
In the United States alone, micro businesses actually added more jobs compared to larger businesses, with analysts predicting that at least 50-percent of the workforce worldwide will actually be composed of freelancers in as early as 2020. And with the average amount of capital startups need amounting to as much as $10,000, you've got to be careful with how the money's spent and kept track of.
Moreover, bookkeeping properly is important more than ever due to survival rates of small businesses. In fact, two-thirds of businesses in general can survive for at least two (2) years since their conception, but only 50-percent get to make it after five (5). After that, only around 33-percent of all businesses can make it after a decade. These numbers aren't to scare you off, but rather motivate you to actually get your game on when it comes to your bookkeeping needs.
Business 101: Bookkeeping Properly For Small Businesses
When you want to elevate your small business into becoming a more self-sustaining enterprise, you've got to make sure all integral aspects of your operations work. This also means you need to make sure aspects of your bookkeeping are intact, which can sometimes be a daunting task considering just how much information you may have to consider on the outset. However, it's also important to remember that bookkeeping for your small business is really a matter of understanding essentials you need to take note of, and how all of them can blend well together. Here's how you can do this efficiently with these tips from Balancing Books Bookkeeping:
- Try to go cloud based in terms of accounting: It's helpful if you keep digital databases for your books and reports, but modern-day accounting is best done in the cloud. This is because a lot of software can actually optimize the bookkeeping process thanks to easy-to-customize templates, things such as deposit slips, invoices, and even business account check printing possibilities.
- See if you can plan for potential major expenses: A lot of things can happen in a business that can be quite problematic, especially major expenses you're not prepared for. If possible, try to plan ways of saving more money to accommodate major expenses you might have for your business. Doing this can at least ensure your budgeting efforts won't exactly be of detriment to the company.
- See if you can spare extra money for taxes: Doing financial records means doing taxes as well, so preparing a fund for tax fees can at least ensure you don't have to cut on your budget by the end of the financial year. This can also help ensure you don't necessarily have to get loans just for the sake of paying taxes.
- Try to avoid cash as much as possible: It's hard to keep track of spending if you're using cash, and you can lose track of write-offs easily because cash transactions don't keep any records. Try using credit or debit cards so you can actively keep track of the money you spend, where you've spent it, and when you spent the money. This also allows you to keep track of your expenses much easier for reports.
- Check your accounts receivable on a monthly basis: It's important to always keep an eye on your accounts, especially if you're waiting on clients that owe you money for your services. Stay on top of all your pending accounts so you know if you're getting all your monthly payments correct. Remember, income can be affected if you don't have your receivables in check. Try to run an accounts receivable report every month to stay updated.
- See if you have separate business and personal finances: If you personally own your business, it's not too new of an idea for you to allot a bit of personal investment to boost the company, and for you to "loan" money from your business expenses. Try to avoid these as much as possible, or at least keep careful track whenever these situations happen.
- Keep an eye on what happens to invoices: If you have unpaid or late bills, these can affect your tax payments and credits. Try to make sure all your bills are organized and your clients pay on time. If you can keep track of your own payment receipts, do so in order to afford yourself extra security.
- Always have a specific time of the week to go over your books: It's important to get yourself some time to check all the activities in your books, just so everything remains in order. This will allow you to have a much clearer view of everything that's happening in your business every week. A system like this will also make sure things are kept organized and well-kept, so whenever report season comes around, you can easily go over and file reports.
- Reconcile your accounts and your reports every month: Try as much as possible to keep daily records of all your accounts, and double check if everything is in order once a month. This is especially in terms of deposits and withdrawals, so you're constantly aware of any potential discrepancies and resolve them.
- Try to find a good advisor: It also helps if you have a financial advisor with you in order to teach you more specific ways of handling your books specific to your business. They're also very capable of answering financial questions you might have and fix mistakes that you might have done while creating your records.
The Takeaway: The Power Of Proper Bookkeeping
Knowing how to bookkeep for your business is one thing, but knowing how to properly use bookkeeping to your business' advantage is another thing entirely. Using the tips above for bookkeeping your small business can allow you to greatly enhance and optimize your work processes. After all, if the goal is to make sure your small business grows and thrives in an ever-changing market, the systems maintaining it have to be stable enough to keep up with your growing needs. Trying out these tips and checking if these apply to your systems can at least allow you to see if there's a way to make sure accounting and bookkeeping for your business can become more of a breeze than a daunting task.