by Elaine Slatter | Featured Contributor
Being an entrepreneur means wearing many hats, but one aspect of your business that you may want to leave to a professional is your bookkeeping. Knowing the financial status of your enterprise at any time is a key component of your success. It helps provide you with the basis on which to make sound decisions for your future. We have put together 12 bookkeeping tips to help your organize your finances.
- Find a good bookkeeper
A professional bookkeeper can train you on your software, answer any questions and fix any mistakes that might have been made. Ask for help when it comes to running your business in the best way possible. Your business can only benefit when your financial affairs are all in order.
- Invest in technology
Accounting/bookkeeping software will make it easy to be efficient, accurate and up to date. More and more business owners are turning toward cloud software and other accounting solutions that allow them and their accountants to access financial information from any electronic device. Popular bookkeeping software solutions are: QuickBooks, Sage, Fresh Books and Xero. Each one has unique functions, ranging on the depth of reporting, payroll modules and inventory control.
- Keep personal and business finances separate
Never mix the two, it will make your accounting much more difficult to handle. It’s a lot easier to keep accurate records if there is only one type of account. There will not be any guessing as to whether it’s a personal or business expense. A lot of time will be saved by keeping these accounts separate.
- Plan for major expenditure
Set aside money for major expenses like large inventory purchases, marketing, repairs and maintenance. By budgeting for these types of expenses, the funds will be available when you are ready not when you can afford it.
- Set aside money for taxes
Setting aside money each month towards paying your businesses taxes and remittances will mean your taxes and any government remittances will always be met on time.
- Keep an eye on your Creditor Invoices
Late and unpaid bills can affect your businesses credit. Keep your bills organized and always pay on time. And if you can’t pay of time, keep an open line of communication with your vendors.
- Reconcile bank accounts monthly
It is important to do bank reconciliations for all your bank accounts, credit cards and petty cash. You will have accurate and up to date information including profit and loss and be able to manage cash flow. Another reason is that it will cut down the amount of time needed by your external accountant in preparing your year-end figures for tax and statutory compliance.
- Review your statements once a month
Did you know the whole story of your business is in your profit and loss statement? Review this statement on a monthly basis to determine how your business is doing. Are your gross profit margins where you think they should be? If they are not, how can you change your costs to improve your profit, or should you be raising your prices?
The cash flow for most small businesses is constantly fluctuating, which means it needs to be regularly monitored. If you are using an online bookkeeping software program, it will be easy to generate and review your cash flow statement from anywhere. This way you can avoid insufficient fund charges by researching financing options in advance and making sure all of your debts are covered.
- Avoid cash
If cash is used, it is hard to keep track of spending. By using a debit or credit card you can keep track of amount spent, where it was spent and when it was spent. This makes tracking your expenses much, much easier.
- Schedule a set time each week to enter all invoices
Make sure that there is a portion of your weekly agenda designated specifically on managing your finances and updating your records. Depending on the volume of invoices you receive, this could be easily accomplished in 30-90 minutes per week, especially if you are using an accounting system with quick entry fields and handy drop-down toolbars.
- Regularly check up on your debtors
Make sure you stay on top of your accounts receivable so that you are receiving payments from clients when they are due. Regularly running an accounts receivable report and issuing monthly statements to clients will help you stay on top of monies that you are owed. It will also assist with your cash flow.
- Good filing system
Maintaining a good filing system is imperative in keeping your paperwork organized. You will always be able to find ‘that piece of paper’ when you need it. This can be as simple as a file organizer, or go one step further and create an electronic filing system and do away with ‘that piece of paper’ altogether. Remember to keep all your business receipts and file them monthly.
By keeping your records in check, you will be able to spend less time on business finances and more time on growing your business.
Elaine Slatter is a Small Business Expert, founder of XL Consulting Group and author of the popular book, “Fabulous Fempreneurship”, a complete business guide for women. XL Consulting Group helps entrepreneurs with market planning, strategy, branding, web design and social media. She has over 30 years of executive business and marketing experience and is ready to help you rocket your business to success. Elaine is passionate about mentoring women to become successful women entrepreneurs. To find out more, visit XL Consulting Group or join the Fabulous Fempreneurship mastermind.