Bookkeeping can be a chore that not many people enjoy, however it is one of the main tasks in the daily functioning of a successful business. By having a good book keeping ethic many businesses can avoid costly errors and learn to look at business successes and failures from different angles. Having a good book keeping system in place can also make it easier for you tackle tax season and deal with various financial issues that a business may have from time to time.
According to Investopedia, Bookkeeping is the recording of all the economic activity of an organization — sales made, bills paid, capital received — as individual transactions and summarizing them periodically (annually, quarterly, even daily). Except in the smallest organizations, these transactions are now recorded electronically; but before computers they were recorded in actual books, thus bookkeeping.
Here are our top five tips for bookkeeping that all small businesses must know:
Planning business expenses
Having a plan that forecasts all major expenses that could come up in the near future is a great way to be prepared for these expenses. for example you may need to buy new office equipment or upgrade your home office, preparing for these expenses will help you deal with other smaller expenses better.
Tracking business expenses
Actually tracking down all the expenses your business has made is a very important task. Missing out some expenses could mean you could miss out on tax write offs. Using a business credit card for all company related expenses can be a good way to ensure your expenses are easier to track. Similarly save all cash bills and file them to receive benefits during tax time. Other expenses you should track include internet bills, car mileage and other travel related expenses.
Record all deposits
Recording all deposits made is an essential part of bookkeeping. The method you choose could be one of your choosing. You could either use an excel spreadsheet, or use a notebook to write down all deposits, but ensuring all deposits made into your company’s bank account are noted down is very important. These records are extremely important when you will be audited.
Deal with Taxes early
Putting aside money for taxes is something all businesses have to do. Not having enough money for taxes when it is time to pay them can mean disaster so it is essential to be prepared for tax time early.
Monitor all invoices
If a bill is unpaid it can hurt your cash flow. Monitor all invoices and have someone issue a second invoice and follow up with a phone call in case of unpaid invoices. If clients make late payments regularly then charge them late fees depending on the period of delay.