Most small business owners do their own bookkeeping, and many use automated bookkeeping software such as QuickBooks Online. These programs simplify typical bookkeeping duties such as classifying and summarizing transactions for financial reporting, and they typically cut down on costs while ensuring you maintain the standards required for professional accounting.
If you feel ready to take on your small business’s bookkeeping, keep in mind that certain practices reduce your chances for errors and mistakes.
Take Bookkeeping Seriously
Taking your small business bookkeeping seriously means making an effort to learn the ins and outs of the process and develop good habits. Standard practices for serious bookkeeping include recording every transaction accurately and religiously, either as soon as it occurs or on the same day.
Also, financial literacy goes a long way in keeping your books in the black, so it helps to spend some time studying up on areas where you don’t feel confident. With this in mind, online resources such as QuickBooks’ Small Business Centre can help you hone in on essential duties and reporting, and many articles explain complex accounting terminology and methods in easily understandable ways.
If you don’t have time to keep up with daily recording, outsourcing the task to a professional bookkeeper can keep your company on the right track.
Keep All Relevant Receipts
Each transaction you enter into your bookkeeping ledger should have a corresponding receipt for fuss-free reconciliation and clear records at tax time. You probably have easy access to the big stuff, such as rent, utility bills, supplier invoices, and sales receipts, but don’t forget to keep smaller receipts for things like business lunches, office supplies, and gas when travelling.
Those small expenses add up over time, and keeping up with them lets you properly write them off at year’s end.
To ensure you have all your receipts come tax time, it helps to have a system in place to collect and organize your paperwork. For instance, you might keep an accordion file or banker’s bag handy to stow your receipts and then file them in folders when you return to your office.
Create an Efficient Bookkeeping System
While bookkeeping software takes a lot of the leg work out of financial recording, having a streamlined bookkeeping system in place to check and double-check your work reduces the risk of bookkeeping mistakes in the long term. This means creating daily, weekly, and monthly checklists to ensure you complete all related tasks on time.
Checklists include the basics of recording all financial data in a timely manner, reconciling expenses with revenue consistently, and recording enough detail about each transaction to make sense of it later.
To keep your data accurate and up to date, you want to back it each time you enter new transactions, though some bookkeeping software such as QuickBooks offers automatic backups to help reduce your risks of data loss.
Regardless of how you backup your data, It’s a good idea to keep several copies of your small business’s books on hand, either in the cloud or on USB drives, SD cards, or DVDs.
Separate Personal and Business Spending
When you purchase items with personal credit or debit cards for your business or use your business accounts to pay for personal expenses, you muddy the waters when it comes to keeping your books. To achieve clear-cut bookkeeping, it’s important to keep your accounts separate.
This ensures you can properly write off expenses at tax time. If you need to fund your business account with personal money, it’s best to transfer the cash to your business account rather than making business purchases with personal cash or credit.
Fostering good financial habits helps you avoid costly bookkeeping mistakes, and clean records also ensure errors don’t carry over to accounting where they can have a much bigger impact on your small business’s financial situation.
Keep accurate books with automatic backups by using QuickBooks. Change the way you manage your finances now.