Small Business Bookkeeping: Creating a Successful Business Infrastructure
Bookkeeping is vital to the long-term health of your small business. But setting up a bookkeeping system can be an intimidating prospect for any small business. If you’re not extremely well-versed, bookkeeping and accounting can be daunting.
While it’s difficult to know where to begin, setting up a strong foundation for your small business bookkeeping doesn’t need to be complicated. Here are some tips to help create a successful business bookkeeping infrastructure.
What is Bookkeeping?
Bookkeeping refers to the process of maintaining your company’s financial dealings. A bookkeeper is a person that tracks finances.
Bookkeeping will include things like monitoring orders/transactions, sending and keeping track of invoices, managing accounts receivable, and issuing payments for company bills.
Bookkeeping and accounting for your small business requires setting up systems or accounts for logging incoming money and outgoing payments. These will include things like payroll, accounts payable, and accounts receivable.
There are a variety of ways to maintain these records, and it’s up to you to choose what works best for you. You might DIY (do-it-yourself) using spreadsheets or accounting software. You may have an in-house or part-time employee manage bookkeeping or perhaps you’ll outsource.
Consult a Tax Professional
Taxes for small businesses can be challenging. It’s often a good idea to work with a tax professional, but don’t wait until your taxes are due. Ideally, you should consult a tax professional when you’re putting your bookkeeping and accounting practices in place. This allows you to make sure that you’re taking steps to avoid tax-time surprises!
Keep Track of All Expenses and Income
To keep your business ship-shape, get serious about tracking your expenses and incoming payments.
Resist the temptation to procrastinate logging small purchases or payments. They may be small, but they matter and they add up over time. Not tracking them can throw off your bookkeeping at best, or result in IRS penalties at worst. So, get in the habit of recording everything as soon as possible!
Balance The Books
When you add all of the debits and credits you’ve logged within a certain time period (weekly, monthly, annually), they should match mathematically. This is what it means to say that the books are “balanced,” and another reason to log every expense and payment!
Create a Business Budget
Creating a business budget can be extremely helpful in building a strong foundation for your small business. A business budget helps you forecast expenses and income.
By creating a business budget, you’ll be better able to anticipate your company’s financial future. It can also help you focus; you can make adjustments where needed to make your financial goals a reality.
Small Business Bookkeeping Tips
Want an extra gold star? These tips will help your business get ahead:
- Make time for bookkeeping. You may not like bookkeeping or accounting tasks, but they are vital to the success of your small business. Schedule a regular time to record transactions, pay bills, and check the status of accounts. If you’re working with an offsite professional or outsourcing company, make time to check the status of your account regularly.
- Be consistent. Once you’ve established your in-house bookkeeping practices and found a system that works, don’t ignore the process. Bookkeeping doesn’t necessarily reward creativity or “going with the flow.” Routine is best when it comes to financial health for your company!
- Keep your business records private. Store sensitive information securely. Don’t store private financial information on a computer that has multiple users, and never share passwords.
- You’re not alone. Small business bookkeeping can be overwhelming for business owners. Consider enlisting professional help from a trained bookkeeper, accounting software, or a bookkeeping outsourcing company.
A Strong Foundation for Your Business Growth
You want your small business to succeed. Your formula for success is to set up strong bookkeeping practices now.