Bookkeeping for small business is easier once you understand your company.
Having your own business comes with a lot of rewards. But to obtain those rewards, you need to put hundreds of hours into your company for it to shine above the competition. One of the main aspects of any business is bookkeeping. If you do not keep track of your finances, you may encounter difficulties when buying supplies or paying your employees.
Fortunately, bookkeeping is not quantum physics. It is an organized form of registering your expenses and earnings, so your business always has a budget, no matter what happens. Now, before you spend that hard-earned money hiring an accountant, here are ten tips for bookkeeping for a small business.
Top 10 Tips: Bookkeeping for Small Business
1. Choose the Right Bookkeeping Software (and learn to use it)
Nothing is more frustrating than wanting to do something in an app and not knowing how to do it. Depending on your business's needs, choosing the right software for your bookkeeping tasks is essential for good financial development.
Before choosing the right software for your small business, you must ask yourself what exactly you need. Do you need a cash flow chart, an inventory slot, or a comprehensive platform linked to your company's bank account? Check every plan available on the different platforms you look at. From there, you can estimate how much the platform cost and how hard it is to learn to use it.
2. Keep Personal and Business Accounts Separate
If this is not the first article you encounter looking for bookkeeping tips, you will know that this specific tip appears in all of the articles you have seen before, and there is a reason for it.
Separating your personal from your business finances is a must in the modern world. You can no longer rely on your memory to keep every account in check every time you make a purchase. One excellent recommendation is to have two separate apps on your phone to track your and your business finances. You can even go as far as choosing different banks for each one.
3. Keep Track of Cash Flow
There is nothing more pleasant than finding money inside the pocket of your old jeans, but just as well, there is nothing more unpleasant than not remembering where you spend that hundred-dollar bill.
Keeping track of your cash flow is a definite must when discussing your business. Experts recommend depositing the cash into your business account as soon as the money enters the company. You will better visualize your budget if you have it all in one place. Another great tip is to keep a specific amount of cash in a safe place inside your business. This cash can help you with emergencies or for change if you have a POS-based store.
4. Make Payroll your #1 Priority
Regardless of what industry your business is part of, payroll should be the priority for bookkeeping for small business. We understand that suppliers and third-party deliveries are just as important, but your employees are the backbone of your company. Without them, you may find yourself without the time to perform all of your business-related tasks.
Remember also to set aside part of the budget for taxes regarding your payroll. Many businesses forget to calculate these taxes and encounter problems at the end of the financial year. You can also browse the internet for some automated payroll options, which can be a game changer if you do your company's bookkeeping.
5. Be Careful with Taxes
Not only do you need to be careful with payroll taxes, but you also need to take into account the different taxes you need to pay and deduct from your daily transactions. Missing tax deadlines can result in fines or penalties that will affect the general budget of your business.
One way to avoid these penalties is to set reminders of all the important deadlines you need to take care of. Setting an alarm or an email notification a month before the date limit will help you get all your paperwork in order while eliminating stress for your bookkeeper, accountant, or yourself.
6. Plan for Mayor Expenses
Whenever your marketing team needs to adjust to following current trends, they will devise a strategy to maximize results and attract consumers to your business. Just as well, your bookkeeping team needs to plan ahead whenever an important date is coming up, such as tax season or Black Friday.
Planning will relieve pressure from your employees and help you make predictions about upcoming quarters, and limit your budget, so you do not overspend on a specific period. Furthermore, if you combine this tip with the cash reserve, you can easily handle emergencies, like equipment breaking down, without worrying.
7. Keep your Business Receipts
Just as you need to keep receipts for anything you would like to deduct from your yearly tax statement, your business needs to keep receipts for particular things like suppliers, vendors, and delivery services.
One great way to keep everything organized is to have a place where you can store those receipts by the vendor. You can even scan these receipts and upload them to the platform of your choice to keep everything in one place. In the end, you will only need those physical receipts when you present your taxes. So, remember where you are storing them.
8. Send Invoices in 48 hrs or less
If you have an online business, you know that invoices are a big deal within your company. Invoices will help you inform your clients how much your products or services cost and the amount of product they bought for a specific sale.
It is highly recommended that you send those invoices as fast as possible, or at least in the next 48 hours after the product or service is delivered. Sending invoices as fast as possible will not only ensure that your clients know exactly what they paid for, but it will also help you keep track of clientele debt and increase your company's money flow.
9. Remember to Pay Yourself
If there is one bullet point you remember from this top ten is this one, pay yourself. Having a business comes with a lot of stress, time-consuming tasks, and many other aspects that can overwhelm you. But it is vital that you also incentivize yourself, and there is no better way to do it than by paying yourself.
While you and your business may be a unique entity, you need to forget about the idea that a small business owner does not earn as much as employees. Paying yourself is a must to keep you motivated to get more. Moreover, remember to reimburse any expenses you had in a certain period.
10. Hire a Virtual Assistant
Saving the best for last, the last bookkeeping tip for small businesses is to hire a virtual assistant. Virtual assistants are specialized in bookkeeping tasks that can help you free some of your time while saving your company's money. Virtual bookkeepers cost half the price of a regular employee and do not need any equipment or training since they already possess the necessary skills, knowledge, and software. They can even learn any platform you use in just a few days, making them perfect for any bookkeeping assignment.
Virtual bookkeepers will keep your finances organized while saving part of your budget. They can also perform most transactions in a matter of hours, and you can choose between different plans when outsourcing your tasks to these experts. Virtual assistants can even provide financial advice so your company can unleash its full potential.
Virtual Bookkeeping for Small Businesses
Bookkeeping can be a daunting task, especially if you need help keeping track of all of your company's transactions. It may even look like an impossible task! Fortunately, plenty of easy-to-use platforms over the web can help you keep your finances organized. Even better, some professionals will work for only a fraction of the price of a regular employee and can help you increase your budget while reducing your expenses.
If you would like to know more about our great virtual bookkeepers, you can contact us here! We will match you with a professional that can help you with any bookkeeping task you need to complete while you focus on other important functions like marketing, sales, or improving your customer experience.