Small business bookkeeping tips for beginners
By Travis Bacon
April 20, 2021
Today, there are so many tools we can use to make life simple.
This is true even when it comes to running a small business. Sure, there’s still plenty of competition in the market, but unlike at any time in the past, simplifying your day-to-day management is much easier.
Bookkeeping, specifically, is one of the most important things you can do to make sure your business is running smoothly.
What we see happening, though, is that accounting is often relegated to a secondary, less important concern compared to your core operations. The truth is that it’s anything but.
When done right, small business bookkeeping can tell you many things. It’s easier to analyse your financial health, create reports, comply with taxation regulations, and it helps you plan how to run your business.
If you’re not sure how to go about this or what you can do to make this process more efficient, take a quick look at some of our go-to bookkeeping tips.
Keep personal and business finances separate
One of the biggest mistakes we see when it comes to small business bookkeeping is mixing your personal expenses with your business finances. While this may seem tempting, especially if you’re just starting out, it can become a headache down the line.
It’s not only harder to get a correct picture of your income and expenses but it’s also riskier. You restrict your personal finances and compromise your business revenue in the long run.
Maintain detailed records
As a small business, you may be juggling multiple priorities. In the process of getting your operations off the ground, you may neglect to keep detailed records of your expenses or even the money coming in.
Down the line, this can become a bigger problem, especially when you’re creating reports or calculating expenses you can be reimbursed for.
The good news is that there are ways to simplify this process.
For instance, you can scan and digitise your receipts so there’s always a detailed record of money coming in and going out. You can also get a corporate debit or credit card so that all, or at least a chunk, of your expenses are recorded in one location.
Make small business bookkeeping easy with automation
Remember how we mentioned that there are so many things out there that make life easy?
When it comes to bookkeeping, and even accounting in general, software can cut down on the time and effort you spend on maintaining your records, dramatically. Platforms like Xero and QuickBooks, for example, can streamline how you record your transactions and analyse your income and expenses.
By doing just a little bit of research and finding a tool that works for you, small business bookkeeping can become one of the things you’re best at!
Maintain a bookkeeping schedule
Even if you know just how important bookkeeping is to the work you do, you may still neglect to maintain your records when you’re pressed for time.
The result of this are figures that don’t tally up, overdue invoices, and cancelled payments. It’s also much more complex, frustrating and time-consuming to sit down and deal with bookkeeping requirements you’ve been putting off.
While certain companies do their bookkeeping on a quarterly basis, you can look into a timeline that works for you.
Don’t just record—reconcile every transaction
Reconciling your income and expenditure is all about cross-referencing your records against what’s sitting in your bank account. If your numbers don’t tally up, you need to do a little investigating into why that may not be the case.
Again, set a schedule for doing this. Depending on the volume of transactions your business handles, set a time to pour over your records on a weekly, monthly or quarterly basis.
This process is also very important when it comes to submitting your tax returns. If this is new to you, start by finding out more about small business tax planning.
Financial success comes from effective small business bookkeeping—are you up for it?
Here at TaxDigital, we believe that business success is not just about putting out a great product or service. Sure, it has a lot to do with that but it’s not the only thing.
Your success also has very much to do with being backed by the right processes—including your bookkeeping activity. Invest in the right tools and get the support you need to make sure that this is the cornerstone of your financial success.