While bookkeeping probably isn’t the most exciting part of your day, it’s a crucial component of running your business and it simply can’t be ignored. At the end of the day, every business wants to be successful – but success is impossible without being able to manage accounts. Whether you hire someone else to handle the books or are taking on the task yourself, here’s some tips that can help you understand the intricacies of bookkeeping for small businesses.
Organization is Essential
If your bookkeeping system is easy-to-follow and organized from day one, it’ll be easier to maintain and adjust as your business expands. While organization is crucial, so is planning ahead for major expenses and mini “disasters.” If your office equipment is currently on its last leg, plan ahead for new desks and chairs. If your staff is small and overwhelmed, plan ahead for new employees or members of the team. By making sure you’ve financially planned ahead for staffing costs or office upgrades, you’ll avoid having to use credit cards or take out loans.
Expenses can be hard to track. Luckily, there are plenty of tools available – such as Sage One’s online accounting products. Online bookkeeping systems typically offer pre-designed templates and auto-fill forms. By tracking your business expenses, you may uncover tax write-offs you may have otherwise missed out on. Business credit cards are exceptionally handy when it comes to keeping track of your expenses – many have even adopted new services that categorize your bill into types of expenses, meaning you’ll have one less thing to do on your end.
Keep an Eye on Your Invoices
Late and unpaid bills can hurt your cash flow. If you don’t want to track billing yourself, assign someone in the company with the task of keeping an eye on invoices and payments. Then, put a process in place if a bill goes unpaid. Additionally, reconciling bank statements on a monthly basis is important – it might seem like a waste of time but, at the end of the day, it can help keep your business afloat. Even if you regularly review your cash flow statement, they should still be double-checked and reconciled.
Set Aside Money for Taxes
Systematically put a portion of money aside throughout the year for taxes, as payroll taxes that go unpaid can be especially problematic for small business owners. If you’d like to avoid dealing with penalties and interest from the CRA, make sure you have money available when you need it. By putting aside money each month, it’ll come as less of a sting when taxes are due. We all know when taxes are due, so it should come as no surprise – plan ahead and you won’t even feel the impact of paying taxes.