Are you someone who has established a new business? To grow your business, you must be involved in the financial management of your business. If you are not a finance expert or not adept with accounting, then bookkeeping may not be your favorite task, but it will help the growth and survival of your business. The International Journal of Science & Research reports that 75% of the participants believed that bookkeeping enabled them to ascertain the financial position of Small and Medium Enterprises (SMEs), and there is a direct relationship between bookkeeping, growth, and the profitability of SMEs.
Here are the nine tips to help make small business bookkeeping easier:
Separate Business Account
You may consider it easier to use your personal bank account for your business; your personal and business finances will eventually suffer, which can be detrimental. To run your business smoothly, opening a business account and getting a separate credit card is crucial to help your company build its credit rating.
If you need to use your business money for personal expenses, then transfer that amount into your personal bank account and use it. If someone is bookkeeping for you, it will be difficult for him to categorize your personal and business transactions. Sorting through personal and business transactions can be time-consuming, difficult, expensive, and lead to mistakes.
Bookkeeping Software
There are many choices available for small business accounting software, but setting up software can be complicated. You should consider using the help of a professional because approximately 82% of experts surveyed believe that a professional should complete the initial setup of a computerized small business accounting system.
Payment Records
It is essential to keep payment records because it helps you remember who has paid in cash. You may forget that a client has paid you, and when you call him for the payment, you may be embarrassed when he tells you he has already paid the amount. Maintaining a record also helps find the clients whose payments are due, and you will know how much profit you have earned.
Save Receipts
Bookkeeping does not depend on receipts to identify transactions, but the Internal Revenue Service (IRS) will need them for all tax deductions. Saving all receipts may seem difficult, but you can scan them and attach an electronic copy to the transaction within your bookkeeping software.
Create Bookkeeping Reports Monthly
To ensure processes are operating correctly, keep your bookkeeping system up-to-date and create monthly records. This step is crucial because you can monitor everything regarding your business and its expenses.
Set Deadline Reminders
It is easy to forget deadlines when you are a busy business owner. Neglected deadlines can result in fines or penalties, especially if you have missed the due date of a tax submission. To avoid this, set reminders so that it will not happen. Add due dates to your calendar to ensure you do not miss any upcoming due dates.
Plan for Major Expenses
Be realistic about the expenses that might come in the near future. Acknowledging seasonal difficulties and how they will impact your future expenses is important.
Set Aside Tax Money
You have started a business, so it is obvious that you are going to pay taxes, so systematically set aside money for it. Plan your upcoming expenses according to the amount you have set aside for taxes.
Outsource Bookkeeping
If you are handling other duties in the office and find bookkeeping difficult or do not have time for it, then outsource it. It would be cost-effective to hire a professional because records will be accurate, and tax preparation will not be your responsibility. According to a study by Wasp Barcode Technologies, 50% of small business holders outsource their payroll accounting.
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