Remember a time when it was so simple to sort your business receipts, bills, invoices, and general paperwork? You might have just been getting started and spent a lot more time growing your business than you did organizing your books. But then you started selling more, got more customers, more paperwork flooded in and everything erupted!
A solid, organized bookkeeping system creates a foundation and a path to success.
No matter where you are in your business, it is imperative that you implement a solid bookkeeping system for your company. By keeping your company’s financial records up to date and accessible, you’ll save time, avoid unnecessary expenses, and you’ll also enjoy better performance over the long run.
Here are 5 bookkeeping tips to help you stay organized while you run your business.
1. Manage Data Efficiently
Consistency and timeliness are critical for efficient data management. Adopting good bookkeeping habits and having an organized structure from the start will make it easier to:
- prepare year-end documentation,
- optimize tax deductions,
- understand your company’s financial position
- find ways to improve your company’s bottom line
Chart of Accounts
Planning for growth starts with your chart of accounts. To ensure your financial reports are informative and to speed up bookkeeping, you must properly label and categorize your records. Start with the basics, then modify and expand your accounts as your business grows and develops.
Recording and reconciling transactions associated with various business activities are key for keeping your books financially accurate. The best time to document expense and income-related events is when they happen. So, make sure your company has a daily bookkeeping process in place for gathering, generating, and filing source documents like receipts, invoices, timesheets, and other tax records.
One of the most important functions of any accounting system is to make it easy to find what you need when you need it. Digitalizing your payables and receivables with online (cloud) accounting software like QuickBooks Online improves data accessibility, and can help do away with the need to store and manage paper files. Software like these also gives your bookkeeper, accountant, and CPA access to your books for easy team management of your finaces.
2. Use Separate Bank Accounts
Personal finances need to be kept separate from your business expenses, which is best done from the initial point of purchase. If not, you’ll end up with a mangled mess of expenses within multiple account statements to sort through and label at the end of the year. You also don’t want to end up with a shareholder account that is too high — forcing you to claim that ‘additional’ income all at once.
To limit the crossover, don’t use your personal credit card for work purchases and vice versa. However, this can happen from time to time (standing in the checkout line and realizing you don’t have your other card), so make a note of that and flag it immediately with your bookkeeper. It can be helpful to take a picture of the receipt just in case you misplace it along the way or use a mobile app that allows you to take picture of your receipts and invoices. Another tip is to store your business credit/debit cards in Google, Apple, or Samsung pay. Now not all stores accept this, but in case you forget your card, this could help in the event that the store does accept those.
3. Take Advantage of Digital Tools
Today there are so many software and apps to help you keep your business organized. Some are free and some are not. There is no excuse not to have an organized business with all of the helpful digital tools at your fingertips. Digital tools like these not only make bookkeeping chores less cumbersome, they also reduce the need for manual data entry which can mean fewer transcription errors.
Automate Whatever You Can
Entering data into spreadsheets and reconciling numbers manually is so old school. Use cloud-based bookkeeping software, and do your business banking online. That way, you can sync your bookkeeping software with your business bank account so you always have accurate, up-to-the-minute records. Plus, with the cloud, your critical financial data is backed up safely off-site.
Time Management Tools
There are so many time/task management apps out there to schedule projects and reminders when things are due. Use these so that you are scheduling a regular time to review your books, make sure things are paid on time, and that your time is being managed effectively. Apps include:
- ClickUp (free version)
- Asana (free & paid version available)
- TeamWave (paid version & includes a CRM)
- Monday (paid version)
Business Management Programs
There’s no better way to organize your business than with specialized industry management software. Whether you operate a charity, construction company, or restaurant, there are dedicated management tools to help you manage your inventory, track production, and monitor your sales more effectively.
Automated Reminders and Electronic Payments
Maintaining better control over your cash can make all the difference when it comes to scaling your business. There are so many tools available with your bank and other apps that help you stay informed on when things are due and where your money is going.
Here some tools to help:
- Signing up for text or email alerts that let you know when bills are ready to be paid
- Signing up for automated payments for recurring expenses
- Using digital invoicing to streamline receivables for clients and allowing to pay online via Square, PayPal, or ACH
- Set alert activities with your bank accounts and credit cards to inform you when your card is being used
- Set alerts with your bank accounts when your account reaches a certain level to prevent a negative cash flow
Taking advantage of digital assistants will not only help to keep your cash flow positive, but it can also reduce the fees associated with late or missed payments.
4. Hire a Professional Bookkeeping & Payroll Company
Despite best intentions, sometimes the admin work for your business will still be your last priority. Getting help on these steps ensures that things are managed proficiently — freeing you up to spend more time on running the sales, service, and operations of your company.
If you don’t yet have a bookkeeper, look into adding this role (even part-time or on contract), which could save you countless hours. Your accountant may offer this service already or offer a referral to their trusted network, so start with a conversation with the professionals already on your team.
Business owners can manage their employee payroll using online payroll software. But you cannot substitute proper payroll knowledge with payroll software.
Going the DIY payroll route means becoming intimately acquainted with regulations surrounding everything from:
- deducting, reporting, and remitting income tax
- dealing with vacation pay
- Dnavigate different payment requirements for full-time, part-time, commission, and contract workers
Many small business owners find it less stressful and time-consuming to work with a payroll service or to outsource their employee payments altogether. Hiring a professional back-office team is often the best way to ensure your payroll process is always completed accurately and on time while staying compliant with payroll regulations.
5. Stay Informed About Your Business
The single biggest benefit of an organized bookkeeping system may be the fact that it’s the only way to stay financially informed about your business. The more you know, the more informed your decisions will be. Making an effort to regularly monitor your accounting transactions and statements will help you plot a successful path forward.
We recommend scheduling regular time to:
- review your business transactions at the close of each day,
- study your financial statements monthly (preferably with an accountant’s help to interpret the information they contain),
- evaluate your income and expenses month-over-month and year-over-year, and
- assess your ROI from various sales initiatives and categories
Formulating an organized plan to track and examine your finances daily, monthly, and annually will help you identify trends and seasonal fluctuations, and highlight areas where your business could be taking steps to improve its short-term and long-term operations. When tax season arrives, you can confidently hand your books over to your tax accountant to maximize your tax returns.
If you’re having problems managing your accounting and bookkeeping processes, we can help! At Bookkeeping Enterprises, we provide bookkeeping services to small and medium-sized business owners nationwide. Connect with us to learn more about the services that we offer.