As a small business owner, you have to adopt the habit of proper financial record keeping. If you don’t keep good financial records, you’ll soon find yourself in a crisis. The aspect of bookkeeping doesn’t have to be complex or costly for your small business. Consider outsourcing bookkeeping if you want to avoid trouble managing debts or expenses and ending up bankrupt before your business even expands. We’ll share a few bookkeeping tips for your business to manage your finances and minimize unnecessary costs.
Keep Track Of All Invoices
By keeping track of all your invoices you’ll avoid cash flow issues. Don’t allow your customers to stay without making payments for too long. In fact, have guidelines to ensure that clients cannot purchase new products until the last invoice is paid. To avoid late payments, think of creating a system where customers who don’t meet the deadlines are charged a penalty, which could be a percentage of the amount owed.
Have A Separate Account For Cash Receivables And Loans
As a small business, you may receive financing from different sources. Don’t make the mistake of mixing this money with what the clients are depositing to your accounts. Have clear records of the money that is considered income and what is borrowed from a financier or lending facility. This helps you to understand what is yours and what the business is supposed to pay back and avoid poor spending.
Review Your Books Regularly
You need to set aside a specific day of the week when you’ll spend time checking your books. Don’t leave this task to someone else entirely. The best part about reviewing your books on a regular basis is that you’ll understand how well your business is doing and take note of any cash flow issues you’re likely to experience.
Keep Your Business Transaction Records Safely
All your day to day business transactions need to be properly recorded and safely kept in case you’ll need them in the future. This includes documents such as bank statements, credit card statements, balance sheets, receipts and invoices for sales and services offered by the business.
Choose Accounting Software Wisely
The best accounting software for your small business is one that’s easy to use and reliable. With time, you should know how to navigate through the software and keep track of your business’s financial status from time to time.
Choose A Reliable Bank Account
Small businesses need a good bank account that best suits their needs. Choose a bank that works for small business owners in terms of offering financing and low-cost transaction fees. You should process all your transactions for the business on this account. Never use your personal account for business transactions. Making sure all your financial transactions are on one account will make bookkeeping easy and quick. Instead of making small personal transactions, transfer the money that you will need for personal use once from the business account. This will make it easier for the bookkeeper to keep track of the money spent for personal use.