Bookkeeping Tips: 15 Things Every Small Business Needs to Know

We’re not saying keep and file every single receipt following each purchase, but keep any business-related purchase receipts so that you can claim for any business expenses. It all depends on the type of business yours is as if you’re working from home, then you can claim back some domestic bills, for example. As a small business owner, you have a million and one things to do. It can be tempting to push your books aside to focus on running your business. But if you want to keep your business on track for success and keep your financial ducks in a row, prioritize your books.

• Good bookkeeping can prove to be the success ingredient your small business needs.
• For instance, it can import transaction details from your connected business bank account automatically, eliminating errors and discrepancies.
• When accurate financial reports are so readily available, it only makes sense to check them routinely in order to take the temperature of your business.
• Accounting can be tedious for any business, but if your small business doesn’t keep tight books it can make your taxes a nightmare.
• Reconciliation involves checking that all financial transactions have gone through your bank account correctly.
• However, saving requires a conservative approach to handling your day-to-day business needs.

Managing administrative work can become complicated as your business grows and that once simple admin process can quickly escalate into a daunting challenge. The obligations about your debt service are crucial in terms of solvency and credit. It’s important to do a detailed analysis to avoid missing signs that expenses are building up. If they creep up too heavily, it can take much longer to correct them and prevent losses in the long term. As mentioned in tip two, if you use Starling’s Toolkit and the Bills to Pay feature, the invoice upload and invoice scheduling is streamlined to work as one process. Planet Compliance is a B2B media site and directory focused on covering business regulations and highlighting the top compliance software applications.

Frequently asked questions: 5 popular FAQs about small business bookkeeping

Staying on top of your invoices will allow you to prevent your clients from ordering any new products or materials from you before they pay their previous invoices. One of the great options to make sure your clients pay in time is to add a late payment fee to each invoice. Plus, creating an audit trail will make it easier to prevent fraud in your business, improve your accuracy when it comes to paying taxes, and finding any missing transactions in your list.

Bills can be overwhelming, especially if you have several receipts coming in and going out from day to day. However, it is equally important to keep track of your incoming bills as well as outgoing expenses, particularly major ones. Also, ensure all your business-related transactions occur in that account (and not your personal savings account!). Down the line, following this one straightforward top will help you in unimaginable ways financially. Considering the above, there is certainly a difference between businesses that thrive and those that falter. Too many business owners make the mistake of ignoring business accounting protocols and end up suffering big time because of it. While there are many factors involved in the making or breaking of a small business, one way you can safeguard your venture from failure is by modernizing your bookkeeping systems.

Keep Business & Personal Finances Separate

Not everyone in your small business team needs access to all your financial records, particularly if they relate to customers and are confidential. When it comes to sensitive financial data, it is important to know when and which team member to give access to. If the books are not accurate, it directly affects the credibility of your records. You need to maintain tight records to get your accounts cleared. If you are a small business owner and a DIY bookkeeper lately missing dinners, late nights and good sleep, this article is right for you. There are some bits of bookkeeping basics and small business bookkeeping tips for DIY bookkeepers to get the ball running.

In that case, you likely already understand that one of the most vital things that you should practice as a business owner is bookkeeping. Having good financial records, managing deposits, invoices will help you practice healthy bookkeeping habits. For small business owners, tracking finances and business transactions may seem difficult, but there are some easy steps to keep the books up to date efficiently. Most small business owners prefer to do bookkeeping on their own. Not all business owners are professional bookkeepers, but somehow they manage and power through it by following bookkeeping tips. It might seem to go easy in the beginning, but you will realize the consequences only when you face errors looming at the time of reconciliations and financial closings. When your business income mixes with your personal accounts, it doesn’t make more money—it just makes a mess.

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Understanding helps identify shortfalls, discrepancies, and other issues that are important to catch early. Reconciliation involves checking that all financial transactions have gone through your bank account correctly. There may be timing differences if you are waiting for cheques to clear . You may pay your bills immediately to reduce your admin time or you may sit down once a week to settle everything that is due.

• We also recommend having a second business credit card to keep those expenses separate from personal as well.
• Of course, your financial projections will not be perfectly matched with your actual results, but your financial projections can be revised as you move through the stages of your business.
• Note down the tax deadline, set a reminder beforehand so you give yourself enough time to actually fill your tax returns without any mistakes and the rest is a breeze.
• If you manage a small business, engaging in accounting and bookkeeping services in Singapore can help lighten your load so you can focus on other key responsibilities.
• This information may be different than what you see when you visit a financial institution, service provider or specific product’s site.
• Additionally, business owners are likely to be unaware of the federal, local, and state laws and legal regulations required for business.
• But complex projects like reconciling your accounts and closing the books should be done by a professional.

This will make sure that you are able to establish a good financial ground for your business. As a small business owner, bookkeeping is something that should never be taken lightly. Setting up an organised system for tracking your spending will make it easier to record expenses and generate financial statements.

Handle your bills as they arrive

The reality is that the way you handle your accounting can make or break your business. Here are several of the most important small business accounting tips to keep your books balanced.

With online payments, you will know the exact amount and even the place and time of payment. With these, there are no chances of losing records of purchase. The golden rule of bookkeeping is you have to make sure that every business transaction and no personal transaction must flow through your business card. It is all about streamlining all your business transactions through one business bank or credit card, without tangling your personal expenses in it. This practice ensures de-cluttered books and no tension for the bank reconciliation. Most small business DIY bookkeepers will be using accounting software like QuickBooks and Xero to keep tabs on their accounting. However, these software tools work with the numbers you feed in them.