From Our Partners at 1-800Accountant
When you’re running a small business, it can be easy to let bookkeeping become something minor and secondary. The focus is on working and pleasing your customers. It’s hard to make time to sit down and go over the numbers if you’re not actively producing anything.
The problem is that healthy finances are the core of your business. Maintaining precise and accurate financial records at all times will help you plan and make better decisions for your company’s present and future. In uncertain times like these, you need to know exactly where you stand and what your company needs to stay afloat.
Here are a few tips to help you improve your small business bookkeeping and keep your company stable in the long run.
Ideally, every small business owner should have separate accounts and separate credit cards for personal and business expenses. It may be a hassle to set up the accounts you need, but it saves you a tremendous amount of time managing your finances.
If you use one account for everything, you’ll have to separate the expenses later. To stay on top of your company’s financial health, you need to include every business expense in your general ledger. You don’t want to have to sort them out from your personal spending first.
Staying up to date with your bookkeeping records makes it easier to report on your finances and ask for aid. During the coronavirus pandemic, every business has to cope with widespread uncertainty about the future. You need to be prepared to act.
When state or federal governments offer disaster financial assistance for small business owners, it’s essential to act quickly to secure the support you need. Having a thorough, recent report on your finances means knowing what you need and being able to prove it. Well-maintained records show investors and federal agencies that you’re responsible and likely to succeed.
A bookkeeping system isn’t complete if you can’t quickly and easily assess your company’s cash flow. You don’t just need to know how much money is going in and out of your business; you need to know how much liquidity is available at any given time.
Weathering a financial storm like the one businesses are in now means having the cash on hand to deal with unavoidable emergency costs when they appear. Healthy, positive cash flow over time is crucial for any business’s well-being, and it becomes all the more essential when the economy is unstable.
The best thing you can do for your bookkeeping is to find ways to automate. Anything you can do to streamline your business and its bookkeeping reduces your overall workload and eliminates human error opportunities.
The most efficient way to do this is to find useful bookkeeping software to compile and sort for you. It may take a lot of work on the front-end to set up, but it immediately pays off in accounting efficiency.
The same goes for the parts of bookkeeping you can’t automate as easily. Establishing a straightforward and quick process for filing expenses and making it a part of your company culture will quickly pay off as it becomes an easy part of your workflow.
When you have to file your tax return or submit paperwork for a loan, the last thing you want to have to do is go on a scavenger hunt to find all the relevant data. All of your financial records should be in one place so that you can access them all at once. A high level of organization makes small business bookkeeping more efficient from beginning to end.
Of course, keeping your records all in one place doesn’t mean sacrificing security. If you have your general ledger stored on an office computer, create a back-up or maintain a version online in secure cloud storage. If you have paper records, digitize them as soon as possible for increased efficiency and ease of access.
Having meticulous and thorough records of your transactions won’t help you if you never look at them. Every week you should be looking over your books to keep track of your sales and to catch any changing trends in the numbers.
You also need to be carefully reviewing and double-checking your records at least once each quarter. Run a trial balance periodically to ensure everything adds up and keep your documents ready for any reports or applications you need to file.
If you’re worried about your business and intimidated by the magnitude of these bookkeeping tasks, consider seeking out an accounting professional. An expert can help you analyze and evaluate your finances and set up a bookkeeping system that works for your business and doesn’t leave you unnecessarily wasting time on small business bookkeeping.
The goal is efficiency for your financial processes and adaptability for your business. You do everything you can to give your business vision a fighting chance, but you don’t have to do it alone.
No information contained in this post should be construed as financial advice from Web.com Group, Inc.