Every business needs a bookkeeper, but there may be something that yours isn’t telling you. We’ve compiled a list of the most common secrets your bookkeeper most likely wishes that you knew to help you save time and money in your business and get the most out of the services that you shell out for.
1. Don’t Ignore Audits
Of course, no business owner really wants to be audited but that doesn’t mean it won’t happen. Fortunately, hiring a bookkeeper reduces the chance that you will need to be audited and help you to prepare if you do have to face one.
Don’t slack off and forget about your audit trails until you actually have to face one. Be sure to adopt a bill payment solution that automatically creates these trails for you by tracking every action in the system so that your records are as transparent as possible. That way if you do face an audit, you’re far less likely to receive a fine or lose your hair due to stress.
2. Use the Cloud
You’d be surprised at just how many business owners are resistant to adopting cloud-based accounting or bookkeeping software. Cloud-based technology can be used to centralise your financial information and make it accessible from anywhere, at any time. This is a huge time-saver and means that you won’t have to waste time and energy rifling through a crammed filing cabinet to double-check an old invoice.
Furthermore, the cloud offers a range of security benefits. For one thing, permissions-based access gives you full control over which employees have access to certain information. Cloud data is also encrypted and heavily protected, which means that physical damage such as flooding or fire won’t destroy all of your records.
3. Remote Working is the Way Forward
Your bookkeeper no longer needs to do house calls. Virtual bookkeeping services mean that accountants and bookkeepers can do the bulk of their work without setting foot anywhere near your office. Cloud-based software means that your bookkeeper can handle all of their duties quickly and efficiently off-site, increasing flexibility and saving time for both parties.
4. Separate Your Duties
As a small business owner, there’s such a thing as being too trusting. Of course, no-one wants to believe that their employees would steal from them but internal theft is very common. In fact, research by the California Restaurant Association found that 95% of businesses have suffered from some form of employee theft.
In order to prevent this, consider separating duties to limit fraudulent activities within your business. For example, the employee who handles financial transactions should not be in charge of recording them, as this makes it easier for them to misappropriate funds and cover up their fraudulent actions.
5. Avoid Double Data Entry
Double data entry means entering data from one system into another. Not only is this a waste of time, it also increases the likelihood that your records will contain inaccuracies, which could compound and create a big problem later on. Instead, integrate your technologies so that all of your records automatically stay accurate and up-to-date. Speak to your bookkeeper about how to connect your cloud accounting software to your expense management so that your records stay impeccable and you can put your time to better use.
By implementing the above simple bookkeeping secrets, you can save both time and money in your business. Be sure to take advantage of the power of cloud-based technology so that you don’t waste time on tasks that would be far better automated, or on commuting when you could be working remotely. Finally, remember to separate out duties to protect your business against employee theft and remember to keep your audit trails accurate and up-to-date.
Did you know we’ve also got a free downloadable eBook dedicated to the most common profit draining mistakes made by small businesses. Check it out here.
Book a free consultation here, to learn how we can help you make better use of technology in your business.
Bookkeeping might not be the most exciting part of running your small business, but it is an absolutely essential task that undoubtedly plays a big role in your financial success. Bad bookkeeping can lead to a myriad of problems down the line, such as missing out on tax deductions or having to pay unexpected penalties. Meanwhile, great bookkeeping helps you to maintain control and visibility of your finances, plan for the future, and make accurate decisions.
What is Bookkeeping?
Bookkeeping is the process of tracking and recording all your financial transactions and is the foundation for all your accounting tasks. The end goal of any bookkeeping system is to have accurate financial records that you can use to make informed decisions.
Bookkeeping Terms to Know
Accounts payable are the amounts of money that you owe to vendors and suppliers. This typically includes things like the bills from the website hosting service or your office supplies provider.
Accounts receivable are the amounts of money that your customers owe you. This includes things like customer invoices, deposits, and payments towards services or products that you provide.
Assets are the items that your business owns. This includes physical assets such as computers, furniture, or vehicles, as well as intangible assets like intellectual property or software.
A balance sheet is a financial statement that summarizes the assets, liabilities, and equity of your business.
Cost of Goods Sold
The cost of goods sold (COGS) are the direct costs associated with producing goods or services, such as materials and labor.
Expenses are the costs incurred in order to run your business, such as rent, office supplies, salary, or advertising.
Equity is the amount of money that your business has earned through profit or reinvestment.
Liabilities are debt that your business has taken on, such as loans, credit card balances, or lease payments.
The general ledger is the main record of your financial transactions, and it serves as a master account book for your business. It includes all accounts for your income, expenses, assets, liabilities, and equity.
Journals are used to record financial transactions in chronological order. These include cash disbursement journals, accounts payable journals, and accounts receivable journals.
Reconciliation is the process of making sure that your financial records are accurate and up-to-date. This involves reviewing transactions, statements, and other documents to verify that they match up.
Revenues are the income that your business earns from sales, services, or other activities.
Payroll is the process of calculating and distributing wages to your employees.
How to Get Your Bookkeeping Right
Now that we’ve established some basic bookkeeping terms that you need to know, let’s turn our attention to the actual process of getting your bookkeeping right. Here are some tips to help you get started.
1. Choose the Right Bookkeeping Software
There are plenty of great cloud software solutions and apps that make bookkeeping easier. Choosing the right one for your business will depend on a few key factors such as budget, features, and ease of use.
2. Set Up a Separate Business Bank Account
If you’re using the same bank account for your business and personal transactions, or two businesses at once, that’s a surefire way to make your bookkeeping far more complicated and frustrating than it needs to be. Setting up a separate bank account for your business will help you to keep everything organized and make tracking expenses much easier.
3. Automate as Much as Possible
Having chosen the right bookkeeping software, it’s important to take full advantage of its features. Look for ways to automate tasks like recurring bill payments, credit card charges, and customer invoices. Automating these processes can save you a lot of time and effort.
4. Stay on Top of Your Records
Bookkeeping is an ongoing process, so it’s important to stay on top of your records. Make sure to update your accounts regularly, reconcile discrepancies in your bank statements, and review any invoices or receipts.
5. Create a Process for Document Management
Accurate bookkeeping requires that you keep up with all of your incoming and outgoing documents. Creating a process for document management will help you stay organized and make filing your taxes easier.
6. Budget for Taxes
One big mistake that many new business owners in particular tend to make is failing to budget for taxes. Set aside some money each month so that when tax season comes, you won’t be caught by surprise.
7. Daily Records
A little-and-often approach to bookkeeping is the best way to ensure that you stay on top of your records. Make sure to keep a daily record of all transactions and reconcile your accounts weekly.
8. Track Expenses Carefully
Having a clear record of all your expenses can help you to identify any potential problems or areas for improvement in the future. Take some time each month to review and categorize all your expenses.
Bookkeeping is an essential part of running any business, and it’s important to stay on top of it by taking the time to understand the basics and setting up a system that works for you. With the right tools and processes in place, bookkeeping can be manageable and empower you to make smarter decisions, creating a stronger and more financially solid business.
Book a free consultation here, to learn more about how our bookkeeping services can support you.
Bookkeeping is essential for tracking and understanding your business’s financial performance. It helps you better understand where your money is coming from and where it’s going, and empowers you to make informed decisions that will help your business succeed. It also helps you stay compliant with tax laws, manage budgets, and make better decisions about how to allocate resources.
Let’s take a deeper dive into how bookkeeping can be beneficial for your business.
1. Better Budgeting
Bookkeeping can help you create and manage accurate budgets. It allows you to assess how much money is coming in from customers, expenses, and other sources, and gives you a better understanding of where your business stands financially. With this information, you can create more effective budget plans that will help you jettison your business to success.
2. Accurate Financial Reports
Bookkeeping allows you to easily generate accurate financial reports that give you a better understanding of your business’s financial performance. This information can then be used to make more informed decisions about how to allocate resources, spot financial trends, and identify areas where you can save money.
3. Tax Compliance and Savings
Bookkeeping helps you ensure that you are in compliance with tax laws by providing accurate financial information. This allows you to avoid costly mistakes and potential penalties from the IRS and other regulatory agencies. Additionally, bookkeeping can help you save money by enabling you to take advantage of deductions and other tax benefits that apply to your specific business.
4. Cash Flow Management
Bookkeeping also helps you manage your cash flow more effectively. With accurate records of expenses and income, you can better plan for cash flow needs and avoid potential problems such as overdrafts or insufficient funds. This will help you make sure that your business has the money it needs to succeed.
One key benefit of bookkeeping is that it can give you peace of mind. Knowing exactly where your business stands financially will give you the confidence to take risks and make decisions that will help your business grow and succeed.
6. Setting Targets and Goals
It’s difficult to set specific goals when you have no idea what your numbers are, but bookkeeping can help you identify your current financial performance and help you come up with realistic targets to strive towards. You’ll also be able to accurately measure your progress along the way because you’ll have the data you need to track your progress.
7. Organised Records
Unorganised records are a ticking time bomb. Bookkeeping helps your business by keeping records organised and up to date, enabling you to quickly access the financial information you need when you need it. This makes it easier to answer questions, identify trends, and make decisions that will help your business succeed.
If you let your records become too chaotic, you can be sure that your business won’t reach its potential. That’s why bookkeeping is so essential to the success of any business. With accurate and up-to-date financial information, you’ll be able to make better decisions and take advantage of every opportunity that comes your way.
As you can see, bookkeeping is an essential component of a successful business. It can help you stay compliant, manage budgets, and make better decisions. With accurate financial records, you’ll be able to take your business to the next level.
If you need help getting your bookkeeping in order, consider working with us to ensure accuracy and consistent record-keeping. With the right help and strategies in place, you can be sure that your business will be on its way to success. Book a free consultation here.