Bookkeeping tips for small businesses

Often times small business owners struggle with bookkeeping and keeping their financials up to date. Bookkeeping is an essential function for a successful business of any size. It allows for you to track sales, expenses, income and receipts and create a general business ledger. Accounting can seem like a foreign language but it is essential to understanding the financial health of your business. Maintaining accurate financial statements is crucial to making sound business decisions.

Separate personal and business accounts

Open up a business account in which all revenue and expenses will be received and paid from. You may also consider opening a savings account to save for taxes and larger expenses. Commingling personal and business funds could result in a loss of liability protection, which is also known as piercing the corporate veil. If your business is registered as an LLC, then operating as a separate entity guarantees legal liability is met. You also won't miss out on valuable tax savings since your bank statements are a record of your business expenses.

Accounting software

Consider using an accounting software such as Quickbooks or Xero. Connecting your bank feed to the accounting software assists you in automating your bookkeeping and eliminating manual entries. Setting up bank rules and auto matching saves time and allows you to quickly perform reconciliations to catch errors and fraud. Bank reconciliations ensure your bank balance agree to your accounting record within the software. In addition, you can enter and track invoices, expenses, set reminders, accept and make payments online.

Record keeping

Although it may seem tedious, keep copies of all receipts in case you need to reference them in the future or as proof to your tax accountant. It is good practice to keep copies of all bank statements and copies of receipts. Most accounting software allow you to upload documents using their app directly from your phone.

Consistency is key

Setup a day and time to prioritize entering invoices and paying bills. This way you are less likely to fall behind. Catching up can be a painstaking and time consuming task. It can also be costly to get back on track. You want to make sure that your records are complete and your accountant has time for review prior to tax filing deadlines.

Hire a bookkeeper

As a business owner you have enough on your plate. If all of this seems overwhelming then you should consider hiring a bookkeeper. A competent bookkeeper will help you to track the day to day transactions of your business, create financial reports, all of which will tell you how much profit the business has made or how much the business is worth at a given point in time.

OPK Tax and Financial Services is here to help. Reach out and setup a meeting if you think bookkeeping support would be beneficial for you. With our experience and guidance we can relieve the stress of bookkeeping/accounting and empower you to make sound decisions based on accurate financial reports.