Managing Your Small Business Finances: Simple Bookkeeping Tips
Tax season can be regarded as the busiest time of the year for businesses, where the simplest mistakes can lead to costly results—including missed refunds, wrong data collection, and missing invoices. Unfortunately, these could affect your income statement, revenue projects, and even P&Ls, which could snowball into poor financial health that could lead to IRS investigations and penalties.
Keep in mind that as your business grows, managing administrative work like bookkeeping can become even more complicated. It’s a daunting challenge, but one that necessitates your attention. With ample preparation and knowledge, you’ll be able to save money, time, and endless instances of headaches.
Here’s how to get your bookkeeping processes right:
Tip #1: Make sure to keep your personal and business finances separate
Your business is a different entity from your personal finances, even if you’re currently operating within your home. You’ll need to keep things separate, as failure to do so can lead to a complex mess of expenses that will be difficult to sort through. With countless invoices to deal with, it can be almost impossible to discern which one of your brunches is actually business expenses from your mountain of lunch cravings.
To help ensure that such crossovers never happen, your personal credit card should never be used for anything work-related. Similarly, your business credit card should never be used for anything personal. Should this accidentally happen, however, make sure to take careful note of it by writing it down on your ledgers. It can also be helpful to have the receipt on hand, to be photocopied for good measure.
Tip #2: Track all your business expenses
Regardless if you’ve purchased an extra box of paper clips or needed another laptop for a new employee, it’s important to document all your purchases, including debt repayments. This should include your cash payments, debit deposits, credit card bills, and even check payments—all recorded into a well-organized ledger.
It’s also important to keep things digitally recorded, be it through a spreadsheet or software. All invoices and receipts should also be kept in a single file, with notes and details attached for easy identification and reference. You’ll likely also need these details come tax season—it’s best to prepare as early as you can!
Tip #3: Embrace the power of technology
Today’s digital world has paved the way for new tools and innovations to arise, which includes the creation of financial platforms that help streamline repetitive tasks. Small businesses can now save on both time and money through the help of a good investment, as they’re guaranteed to cut costs effectively and improve efficiencies in more ways than one.
Manned by a skillful bookkeeper, you’ll have the means to perform business system analysis that would have otherwise been difficult to have. They’ll also have carefully extracted data to provide insights and recommendations, all designed to help improve your bottom line. Simply put, you’ll have the power to command your business’s future!
The Bottom Line
A small business owner is expected to don countless hats, which is necessary for the success of the overall business. You’ll need to handle every single aspect of your business, but the details must always be left in the hands of a professional—especially when it comes to your finances. The tips listed above are designed to help you succeed in the long run, but keep in mind that all of them require the help of a critical element—a skilled bookkeeper!
For the best bookkeeping services in New York, Totally Booked has you covered. We streamline your bookkeeping processes, ensuring that everything is kept updated, manageable, and above all, effective. Let’s have a chat—reach out to us today to learn more.