It’s not uncommon for small business bookkeeping to not be your favourite activity. It’s always fun to look at your profits, but what about going over your ledgers and calculators? Maybe not as much as you’d think.
If you’d like to simplify (and speed up) the bookkeeping process, here are a few tips.
Assist yourself with bookkeeping on a regular basis.
The easiest way to do your own bookkeeping is in manageable chunks. Don’t try to do it all at once. The last-minute, panic-fueled bookkeeping cram session right before tax time may be entertaining, but you can do yourself a favour by completing routine bookkeeping tasks every week.
As a starting point, learn the fundamentals of bookkeeping. Bookkeeping basics for small business owners are explained in our how-to guide. Then, set aside an hour each week for bookkeeping on your calendar. A checklist of routine tasks can be completed during that hour.
Examples of these tasks include the following:
- Pay attention to invoices and keep track of payments
- Verify expenses and invoices, and pay them off.
- Check the balance of your business’s account.
- Recognize and classify your expenses and incoming payments
- Receipts and documents should be recorded and stored.
- Compile and review your financial reports.
When you’ve completed your checklist, your records should be current. All you need to do is a little bit of work each week to keep your books clean throughout the year. When it’s part of your small business bookkeeping routine, it doesn’t feel like work.
Personal and business finances should be kept separate.
Separate your financial affairs. The result of combining your business income with your personal accounts is a financial mess. Separate bank accounts for personal and business expenses will save you time and energy by eliminating confusion.
You can open a business bank account even if you’ve never done so before. If you already work with a bank, it doesn’t hurt to look at other options. Even though your priorities may be different, you should still consider opening a bank account with no minimal fees.
Create a new account quickly and easily after selecting a bank. Set up a debit card through your business bank account for online payments and purchases. There is a major benefit to having all of your business transactions reflected in the same account, which simplifies the reconciliation process.
Of course, separating your accounts does not mean that your business does not pay you. You can withdraw a regular salary from your business or, if you’re a sole proprietor, you can pay yourself using the draw method. These withdrawals, which are also known as owner’s draws, are easy to track and document in your bookkeeping system. In your business account statements, you should record any payments you make to yourself, whether it’s a draw or a salary.
Bookkeeping is as simple as linking your business bank account to your accounting software once you’ve separated your accounts. Your weekly bookkeeping session should be a breeze when you check your single account and categorise purchases and record payments. A little bit of parsing and cleaning up is all that’s needed.
Everything should be documented.
Form the habit of documenting everything to ensure a peaceful sleep. Maintain a record of all receipts. Make a list of purchases and expenses and file them. Each and every cash purchase should be documented. All purchases must be accompanied by your own receipts. To store invoices, receipts, and records, you’ll need a storage system and name-protocol. Investing in a receipt scanner app may be necessary.
Every transaction involving money, time, or goods should be documented and stored.
Documents should be recorded and categorised every week during your bookkeeping session. At the very least, quick, regular audits of your documents and transactions will ensure that you never have a stressful night’s sleep.
Accounts receivable should be monitored.
In terms of small business bookkeeping tips, monitoring your accounts receivable is by far the most enjoyable — counting your money is always fun. Ensure that all your invoices are paid, especially if your work is completed before the client’s payment has been received. The next project can be so exciting that it’s easy to become distracted and forget to send invoices to your previous clients.
Routinely completing your invoicing tasks will simplify your accounts receivable and ensure cash flow. Your weekly tasks for accounts receivable should include the following items:
- It is also possible to send invoices via email.
- Clearing invoices that have been paid
- Payments are recorded and tracked in the accounting software.
- Noting cash payments in order to maintain a clear paper trail
- Assisting with the collection of any unpaid invoices
Keep track of all payments made with cash.
Despite being the most important factor in DIY bookkeeping, cash still requires special attention. Cash, unlike checks or online payments, does not come with handy documentation. Until you create a paper trail, there is no record. Documenting your cash flow is easy once you have a simple system in place.
Cash payments can be made in two ways. You’ll create a receipt for every cash payment you receive with the first method. Take advantage of an instant-duplicating receipt book so that you can quickly write out an invoice for a customer and keep a record for yourself.
Instead of carrying around an actual receipt book, you can always use technology to keep track of your expenses. Cloud-based software, such as your smartphone or laptop, allows you to keep track of your money. You’ll always have access to your cash-tracking document or app this way. Cash exchanges and reasons for them can be tracked using your online system. As soon as you make a cash payment, ask for a receipt to help you keep track of the transaction when you update your records.
During your weekly bookkeeping session, cross-check receipts and cash flow to ensure that your cash systems are up-to-date.
Review financial reports on a regular basis
Financial documents can be accessed at any time when updating your numbers every week. It is possible to view your income statement and balance sheet using straightforward accounting software. How are you doing in the third quarter? What year is it going to be? Today? Find out as soon as possible.
There’s no reason not to check your financial reports regularly, especially now that they’re so readily available. Your weekly bookkeeping check-in might include this as the final task. Run a quick report after you’ve entered all of your transactions and double-checked all of your supporting documentation. Sharing your earnings with others is a great way to motivate yourself to get back to work. A weekly income statement is one of the most motivating things you can look at.
Automation is the best way to simplify your life. Bookkeeping apps and software are widely available, so unless you’re dying to break out the adding machines and slide rules, feel free to use them.
Banking and accounting apps can be used in conjunction to reduce the amount of data entry required to maintain your books. Your bookkeeping tasks will be significantly reduced once you find the right software for your needs: instead of entering every transaction, you’ll be double-checking them.
Find out how to automate your accounting with these helpful tips. A few of our bookkeeping hints may be able to be of assistance.
Leave it to someone else to take care of it.
Software to automate your bookkeeping is great, but you know what’s even better? Entrusting the task to a professional bookkeeper
In order to focus on the work that is most important to you, it’s sometimes best to outsource the tasks you don’t have time for. Because a professional bookkeeper isn’t overwhelmed by the details of DIY bookkeeping, you can focus on making money instead of documenting it with their assistance.
How Finanshels can help
Want to work smarter, not harder? Let Finanshels handle the bookkeeping for you! When you sign-up with Finanshels, you’ll get an easy-to-use platform and direct access to your in-house small business bookkeeping team. The return on investment with a dedicated bookkeeper may surprise you. you can take comfort in knowing your financials are 100% correct and ready to be handed off to your accountant.
Simplify, automate, and ultimately delegate your bookkeeping. You’ll get your time and energy back for tasks that only you can handle. After all, isn’t that why you started your business?