Whether you’ve recently started a business or are a seasoned veteran small business owner, chances are you’ve struggled to keep accurate records. Even if you’re not a trained accountant, you know that few things are as crucial as cash flow, budgeting, and recordkeeping. Poor recordkeeping or a poor management system for your expenses can lead to serious business difficulties.
If you’re unfamiliar with accounting or basic bookkeeping, managing a business’s finances can seem daunting. Creating a system or maintaining your business finances doesn’t have to be overwhelming. Introducing a few smart fiscal habits into your current routine can put your business on the path to financial health. We’ve compiled a list of a few best practices to help an entrepreneur become a better bookkeeper and financial manager.
6 Tips for better small business bookkeeping
Owning a small business doesn’t mean you’re an accounting wizard or a keen financial manager. Maybe you’re great with numbers but find you never have the time to get to the books. Your finances never stop moving when you operate a business, and before you know it, a backlog of accounting is awaiting you. Regardless of what obstacle is keeping you from managing your books, you can get your business finances back on track by following these simple tips we’ve compiled below.
Find an Automated System for Employee Services: Even if you have just one or two employees, keeping track of employee work hours, tax withholding, insurance, or other service needs can quickly become overwhelming. While this may not seem like a bookkeeping issue, employee services significantly impact your budget and cash flow. Find user-friendly software that works with your chosen bookkeeping system and automate the process as much as possible.
Keep Your Personal and Business Finances Separate: One of the reasons many small business owners are overwhelmed by the task of managing their business finances is they’re comingling their personal and business assets and debts. It can be difficult to know how your business performs when these accounts are managed together. Plus, by separating the accounts, you can begin to build a credit rating for your business – which could be beneficial in the future if needed.
Take Advantage of Technology: Spreadsheets, computers, online banking, and financial management software can provide a much-needed support system to business owners who need help managing their company finances. Many modern programs allow users to sync banking information within the accounting software, so your financials are always up to date.
Schedule Financial Checkups: Even with modern software, there is no substitution for a set of eyes overseeing your books. Even if you can’t do it every week, you must schedule a time each month to ensure your checking accounts are balanced and your invoices are paid. A monthly checkup, followed by a quarterly review of your accounts, can ensure you aren’t caught off-guard by business matters like slowing sales, cost increases, and past due balances.
Monitor Business Expenses & Account Receivables: Keeping track of your business expenses can ensure you are in the best position when tax season arrives. Whether you compile your taxes alone or have professional assistance, monitoring your expenses and keeping track of purchases can help put you in the best possible tax position. You should also keep a close eye on money owed to your business.
It’s easy to allow loyal customers to pay late, and late becomes later, and eventually, you can find yourself in a hole your customer may not be able to climb out of promptly. Don’t put your business in this situation. Keep your late-paying customers from becoming too far behind because slow payments can harm your business cash flow.
Stay on Top of Your Taxes: Whatever you do, don’t allow your tax liabilities to become unmanageable or disorganized. Even the most well-meaning business owner can find themselves in trouble with the IRS. It’s easy to put off saving for your tax bill until the last moment, only to realize you don’t have the funds available. Good bookkeeping is integral to accurate tax preparation. When your business finances aren’t handled properly, it can lead to tax problems. Tax problems are terrible for your business because failing to pay your taxes on time can lead to fines and penalties.
Mississippi bookkeeping and tax preparation attorneys
Many small business owners don’t realize they need help with their company finances until there’s a problem. At Damiens Law Firm, PLLC, we offer free consultations to provide our clients the opportunity to have their cases reviewed by our legal team without worrying about paying a fee before you know we can help.