Whether your business is large or small, a strong bookkeeping system is vital. Without bookkeeping, your business would not fulfil tax requirements and you would not be able to predict your finances.
You should create a good bookkeeping system from the beginning of your business to make sure you get into a routine and find the best ways possible to keep on top of your bookkeeping.
Here, we have listed our top 5 tips for bookkeeping.
1. Get Into A Routine
Scheduling times to go over your books is an important way to avoid unnecessary stress when the financial year comes to an end.
We suggest using a planner to find time once a week to update your books.
Even if you choose to outsource your bookkeeping to a professional, this practice will keep you aware of your company standing and allow you to plan for the future.
2. Keep Your Records Organised
- All businesses should keep a record of their sales, expenses and bank transactions. It is good practice to store these files for at least 6 years.
- Maintaining your records either manually, in a box/folder, or digitally will make your life much easier at the end of the financial year.
- There are plenty of free digital storage options ideal for business startups, including Dropbox and Google Drive.
3. Separate Your Personal And Business Finances
Having a separate bank account and credit card for your business will make it easier to navigate your records.
Not only will you be able to detect discrepancies in cash flows, but you will also be more accurate in claiming tax deductions for your business costs.
4. Take Control Of Accounts Receivable
- Accounts receivable is money owed to a company, such as the cost of a service that a client has not yet paid.
- The best way to stay on top of your accounts receivable is by setting standards early in your business.
- This means, sending out invoices with clear terms of payment and communicating potential consequences if payments are missed.
- When deadlines are approaching, do not hesitate to follow-up and send reminders.
- Without consistent credit control, your business is at risk of having a negative cash position.
5. Find A Good Adviser
Small business owners often find themselves stressing over technical requirements that do not directly impact their bottom line.
By outsourcing your bookkeeping to a professional, you can save your company time and money.
You should have a good relationship with your advisor, as at the end of the day you are responsible for your accounts.
A Good Adviser Can:
- Answer specific questions
- Teach you how to effectively navigate hurdles
- Serve as a fresh set of eyes to identify and solve mistakes
Bookkeeping can be overwhelming if you don’t have a strategy. Once you find your routine for bookkeeping it can save you much more time in the future and will ensure you fulfil tax requirements.