What is bookkeeping and why is it important?
Bookkeeping involves keeping track of the financial records, such as receipts, expenses, invoices, and bank statements in your business.
But why is it important?
Good bookkeeping can help to grow your business! By keeping on top of your business’ bookkeeping you can forecast your business’ finances. This will help you understand your business and learn how you can grow.
You should start applying a good bookkeeping system as soon as you set up your business. Here are our 5 bookkeeping tips:
1. Schedule time for bookkeeping
If you have an important call to make, you will schedule a time for it. So, why not schedule a time for your bookkeeping too?
Schedule a time every week or month to go over your bookkeeping. This will save you time in the long run. In addition, it ensures you’ll be stress-free at the end of your financial year!
If you outsource your accounting, it’s still a good idea to schedule a time for your books. By checking on your bookkeeping, you are also managing your cash flow. This can help you plan for the future.
2. Use online accounting software
These days, most businesses can be managed online. You can manage inventory, and sell and market online.
Taking your bookkeeping online will make it easy to keep organised records.
Moving your accounts online with Xero is a great solution to keeping organised records. Xero is great online accounting software that offers a beautiful, user-friendly desktop and mobile app that allows you to manage your bookkeeping anywhere.
Did you know that even if you keep a copy of your receipts and bank statements on Google Drive, it is still not considered to be ‘online’? This is because you or your accountant will still need to go through each individual record. Online accounting software, such as Xero, does this for you automatically and gives you great dashboards to help you manage your cash.
3. Connect your business bank account
If you’re just starting out, you may not have a business bank account yet but it’s best practice to get one as soon as possible. Using a personal bank account for business transactions will make your bookkeeping messy and difficult to sort.
Once you have a business bank account, you can connect it to your online accounting software and get live bank feeds.
By connecting your bank account to Xero, you can also do easy bank reconciliations. This will save you time when you do your bookkeeping.
4. Use automation tools with your accounts receivable
Another great bookkeeping tip is to use automation tools with your accounts receivable. This refers to the money owed to your business. You may have accounts receivable because a client has not paid you yet.
Start by outlining clear terms of payment and communicate the consequences of missed payments. However, this doesn’t always ensure that your clients will pay you on time. You may still need to chase them with reminder emails and phone calls.
But if you’re a busy Startup, you might not have time to chase your clients. Good online software, such as Xero, has automation features built-in so you can set up automatic emails before and after their payment due date.
Use the template function to make the email say what you want. You can also make sure your clients are gently reminded that they owe you money!
5. Match your online business with an online accountant
Even if your business is offline, you can still manage your bookkeeping online. Straight away you’ll notice how easy it is to get an overview of your cash flow anywhere.
Once you’ve seen the benefits of going online, you’ll want to match with an accountant that is as online as you are!
Talk to us if you would like to know more about our Online Bookkeeping Services. Our Client Services Team is always happy to talk to you.
Kiera leads the Bookkeeping, VAT, and Payroll Teams at Accountant Online. Kiera has worked in the financial services industry for over 18 years. She is passionate about helping businesses to get their finances in order so they can get back to what’s important: running your business. Kiera holds a part-qualified accountant qualification from ACCA.