For most people, bookkeeping can be tedious, but if your small business doesn’t keep on top of your finances, it can become a nightmare at tax time. Without good systems and processes, a lot of things can slip through the cracks and end up costing you money in the long run. With a clear-cut process and some simple bookkeeping tips, you can get a better grip on your financial situation, and even increase your earnings.
1. Go Paperless by Using Cloud-Based Accounting
With the addition of cloud-based accounting systems like Xero, you can access your business information from anywhere by logging in to their website. You can also use the Xero app on your phone to upload receipts, add bills, create quotes and invoices and reconcile your bank account on the go.
2. Find A Good Bookkeeper
Having a good advisor to help you at least once a month can become invaluable. They can teach you how to handle your books properly, answer any questions and fix any mistakes. They can also provide training to get the most out of your accounting software. There are many options out there, so don’t worry if your budget is small.
3. Keep Personal and Business Finances Separate
Never mix up the two, it will make your bookkeeping much more difficult to handle. It’s a lot easier to keep accurate records when only dealing with one type of account, so stay organized. You will save a lot of time by keeping these accounts separate.
4. Plan for Major Expenses
Set aside money for major expenses like inventory, registrations, repairs and maintenance. Setting budgets means you can save a lot of worry about dealing with these expenses in the future.
5. Set Aside Money for Taxes
If you keep track of your financial records properly you can be prepared for year-end taxes. Setting aside a little bit of money each month towards paying your taxes means you won’t have to cut back at the end of the year or get a loan to pay your taxes, you will already be prepared.
6. Keep an Eye on Your Invoices
Late and unpaid bills can affect your businesses credit and affect your tax payments as well. Keep your bills organized and always pay on time. The Xero Dashboard has a “Bills to Pay” section so it is clear where you stand with your bills on any given day.
7. Keep Daily Records and Reconcile Bank Accounts Monthly
Check your bank accounts at least once a month. Reconcile your withdrawals and deposits in your account so that discrepancies can be spotted more easily while they are still fresh in your mind. Set up rules in Xero to automatically match off regular items in your bank such as bank fees.
8. Avoid Cash
When using cash, it is hard to keep track of spending. You also lose track easily of write-offs because there is no record of purchases. By using a debit or credit card you can keep track of amount spent, where and when it was spent. This makes tracking and claiming your expenses a lot easier.
9. Set a Specific Time Each Week to Go Over Your Books
Give yourself at least a half an hour every week to go over your finances and make sure everything is in order. This way you will have a broad overview of your business every week and everything will be organized when tax time rolls around.
10. Check-In Monthly On Your Accounts Receivable
Having a client owe you money for services, especially at the end of the year, isn’t the same as having that money in your business account. Make sure you stay on top of your accounts receivable so that you are getting all the monthly payments you are owed. The Xero Dashboard also allows you to easily identify money owed to you every time you log in.
Keep your records in check using these bookkeeping tips and you will be able to spend less time on business finances and more time growing your business.
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