Small Business Tips for Bookkeeping.
Let’s talk about cash flow. Do you know how much cash is flowing in and out of your business daily?
One of the main struggles for small business owners is money. When you work for a corporation you don’t have to worry about tracking down every transaction or receipt, you also don’t have to report your taxes every quarter! Can you imagine how backed up the IRS would be if every working American had to submit taxes quarterly? YIKES!
As small business owners, you wear many hats and one of those often includes a bookkeeper or accountant. There isn’t a guide on how to run or operate your business and there are thousands of resources so even researching what to do can be overwhelming. I’ve put together my top five tips to get your books organized and easy to navigate.
Tip #1 Create a yearly budget
Budget, budget, budget! A yearly company budget will help you get a glimpse of what your expenses might be for the year and can help you visualize your profit and loss. Don’t worry, if you are just starting an estimate! Not sure how much subscriptions will cost? Research! Creating a budget will also help you see any holes you might have missed in your business plan.
Tip #2 Get a separate business bank account
Business 101: separate your finances! You don’t want your business funds going into your personal account and then business spending out of that same account. Keep business with business, you can make payments to yourself but when tax time comes around you want to have all of your business expenses and profits separate from your personal. The reason for the separation? You want an accurate depiction of profit and loss come tax time.
Tip #3 Sign up with an online bookkeeping service
Quickbooks, Wave, and Freshbooks can all be your new best friend. Signing up with an online bookkeeping service allows you to import daily transactions directly from your bank account to their software. The best part is you can run regular reports for cash flow, balance sheets, and profit and loss. Many of the online bookkeeping services also offer a payroll option so once you have team members you can add this service on. You can also create a custom chart of accounts as well as pay vendors directly through their bill pay services. I recommend Quickbooks online you can learn more here.
Tip #4 Create a Chart of Accounts that Matches Your Budget
A chart of accounts allows you to categorize your expenses and debts so that you can easily track where your money is going. The best way to keep track of these expenses is to craft a chart of accounts that matches your yearly budget. When you match these two items you are allowing yourself to track trends and forecast for the future. There are tons of examples of charts of accounts and Quickbooks has a very easy setup for creating your chart of accounts. Read about Quickbooks here.
Tip #5 Organize your receipts
If you take away anything from this blog it is to be extremely organized! Your receipts are the breadcrumbs to your money trail. You want to keep a record of everything you spent on your business, especially if you are brand new and in your first year. Create a filing and naming system based on date, category, and use it to easily find your receipts. You can use Dropbox to keep your files organized or even apps like Expensify. Learn more here.
If you feel like your books are too complicated for you to keep up with, invest in a bookkeeper! When it comes tax time and you don’t know what to do, ask for help! If there is one department that asking for help is mandatory it is accounting. We may be powerful do-it-yourselfers but accounting is not something you want to guess.
Best of luck!