Bookkeeping Tips for Your Small Business
Managing your business’s finances is key if you’re looking to stay profitable for extended periods of time, and having someone do it right is usually worth the amount of money you’ll spend on a high-quality accountant.
If you look at the numbers from the Bureau of Labor, you’ll find that more than 20% of all businesses never make it past their 1st year, whereas only 30% remain in the market a decade after they’ve started operations.
Hiring the right man to keep track of the books can help maintain your cash flow and repair any leaks if they may happen, ensuring that your journey to greatness is a smooth ride.
On top of this, a good accountant can give you tips on what you could be doing better in terms of running your business, and with just a few minor changes, you could see some serious growth in your company.
Separating your expenses
The first thing you should do when starting a small business is open a bank account that you’ll be using exclusively for work-related expenses, and you can do this right after you’ve got your Employer Identification Number.
You’ll also find that business accounts offer a number of perks that a standard account won’t have, including the ability to keep track of all your expenses as a way of making use of tax deductions, personal liability protection, and access to a line of credit that your company can use to cover gaps in finances.
You should also make sure that your business has both a checking and a savings account, as well as a merchant services account which will allow you to accept credit and debit card transfers from any of your potential customers.
Accepting credit card payments is crucial in this day and age when everyone’s using them, and you’ll always want to be at least one step ahead of the competition.
In general, bookkeeping is defined as the process of tracking every smallest income and expense your business makes, and keeping track of so many numbers can be difficult for a human being to handle.
This is why software has been developed to help lighten the load, and while Excel spreadsheets have been around for over 2 decades at this point, modern bookkeeping software is much more flexible and user-friendly.
The right piece of software can practically do all the work for you, and by automating the entire process, you’re ensuring that time is dedicated where it’s needed the most rather than hunting down a small leak in your business’s finances.
More than half of all business owners in the US reported using some form of cloud-based solutions for bookkeeping, and even though the solutions are simple at the start, you’ll want to work your way up the ladder as your company grows.
Know the budget you’re working with
Keeping track of all your expenses isn’t enough, and you’ll want to know exactly what amount of money your business is able to put forward at any point in time.
This way, you can generate a game plan for the future as well as prepare for any contingencies that may arise.
Develop a series of revenue projections and anticipated expenses and then compare that to your actual revenue and expenses.
The numbers you get will be the most realistic representation of the budget you’re working with, and if you feel they’re subpar, it just means your company needs some work before you’re ready to set sail for deeper waters.
It’s been reported that over 60% of businesses with good financial health have developed a budgeting plan, and with it, created a separate bank account for payrolls, whereas less than 5% of those with poor financial health had some sort of budget in mind.
Keep your books up to date
If you’re not consistent in your bookkeeping records, you’re slowly going to lose track of what your company’s financial state actually is, and no amount of professional bookkeeping can salvage a business at that point.
Automating all your receipts and invoices is one of the best ways to make sure everything’s up to date, and you could also link your bank accounts with your accounting software, although you would be exposing your company to unnecessary risk by doing so.
Some software will offer to do this automatically, making it possible to do all of your banking in the accounting app as well, meaning that you’ll never have to log into your bank account portal again.
A bookkeeper can either build a company from the ground up or completely destroy it based on their skill set, and you’ll want to find one that’s skilled at doing the former.
Of course, digital accountants have been around for several years, but nothing is more trustworthy than a man with a plan, and if you hire someone who’s dedicated to their work, no amount of money you spend will make you regret it.