8 Bookkeeping Tips to Simplify Small Business Financials Bench Accounting

bookkeeping tips for small business

A lot goes into it—from managing payables and receivables to balancing books. But what might seem like an overwhelming task isn’t so bad when you break it down to the bookkeeping basics. Our partners cannot pay us to guarantee favorable reviews of their products or services. If you want to crunch the numbers a bit faster and get back to the more exciting parts of your business, we have a few bookkeeping tips to help simplify (and speed up) the process. Small business bookkeeping is a necessary business task, but if it’s not your favorite activity, you’re not alone. Admiring your profits is always fun, but going over ledgers and calculators?

If you don’t carry a receipt book with you everywhere you go, you can always rely on technology. Keep track of your cash using cloud software that links through multiple devices, like your phone or laptop. This way, your cash-tracking document or app is always readily accessible. You can use your streamlined online system to note how much cash is exchanged and why. When you make a cash payment, ask for a receipt to support your recordkeeping when you update the transactions later. Cash may be king, but it needs a bit of extra attention when it comes to DIY bookkeeping.

The LIFO accounting method

The accrual method is a bit more difficult, in that your bank statements might not reflect the amounts on your income sheet. However, the accrual method is the required method for large corporations in the U.S., and besides that, it tends to provide you with a more accurate picture of your overall finances. Unlike accounting, bookkeeping does not require any certifications. Individuals who are successful bookkeeping professionals are highly organized, can balance ledgers accurately, have an eye for detail and are excellent communicators.

Local bookkeepers, in-house bookkeepers, and freelance bookkeepers, to name just a few. You can even hire a virtual bookkeeper to do all your bookkeeping and accounting tasks while being located anywhere in the world. In fact, it’s what is work in progress wip? one of the best things you can do for your small business.

bookkeeping tips for small business

Become Familiar with Bookkeeping Statements

Professional bookkeepers and accounting professionals are available to manage, track, and report on financial activities. For a small business, this can be a great way to get the benefits of having a dedicated bookkeeper and accountant without the need to build out your own accounting and bookkeeping department. Accountants rely on bookkeeping records what could affect a company’s gross profit to analyze and advise on the financial activity, health, and growth potential of a business. Income statements feature the business expenses and revenue by different categorized profit centers. When doing the bookkeeping, you’ll generally follow the following four steps to make sure that the books are up to date and accurate. Remember that each transaction is assigned to a specific account that is later posted to the general ledger.

Your financial transactions

If you carry inventory or have accounts payable and accounts receivable, you’ll likely use accrual accounting. Canada is home to plenty of experienced, knowledgeable accountants and bookkeepers who can assist you in developing a system for financial record keeping. QuickBooks accounting software can help you ease into the accrual method of accounting by ensuring that your records are accurate, based on information from your credit card or payment apps. If you plan on growing your business in the future, you’ll probably want to get used to using this method. QuickBooks cloud accounting software also has cost center definition options for payroll, expense tracking, and inventory. A program like this makes it a lot easier to check your records on your laptop or smartphone even when you’re out of the office.

This means that you don’t record an invoice until it is actually paid. Similarly, you don’t notate outstanding bills until you actually pay them. This method offers a true snapshot of your assets and debts at any given time.

  1. Under double-entry bookkeeping, all transactions are entered into a journal, and then each item is entered into the general ledger twice, as both a debit and a credit.
  2. Keep in mind, single-entry bookkeeping’s simplicity doesn’t allow for GAAP conformation.
  3. The information you get from your receipts should go into some kind of ledger (usually a digital option).
  4. Accrual basis accounting records those invoices and bills even if the funds haven’t been exchanged.
  5. Finally, if you want someone else to do your bookkeeping for you, you could sign up for a cloud-based bookkeeping service like Bench.

Maintaining bookkeeping tasks is essential for the stability and success of small businesses. With so many moving pieces (including assets and liabilities, and income and expenses), small business owners must stay on top of it all. Keeping track of bookkeeping tasks as a small business owner can be challenging. You have to know the ins and outs of your business expenses and all your personal and business finances. Bookkeeping is the process of tracking income and expenses in your business. It lets you know how you’re doing with cash flow and how your business is doing overall.

Sending an invoice within 48 hours is a great account receivable practice to boost collection. Again, if you outsource payroll, it’s wise to have a separate business account you’ll dedicate only to payroll. This way, the payroll provider won’t have access to your primary account.

You could go with one of dozens of popular cloud accounting solutions, like QuickBooks, Xero or Wave. However, if you don’t have a lot of bookkeeping experience (or don’t have time to learn), they could stress you out more than they help you. Especially if your accountant ends up telling you you’ve been using them incorrectly for the past year. If you need to borrow money from someone other than friends and family, you’ll need to have your books together. Doing so lets you produce financial statements, which are often a prerequisite for getting a business loan, a line of credit from a bank, or seed investment. When it comes to bookkeeping tasks, there’s a great deal to learn.

Categories: Bookkeeping

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