For many small business owners, maintaining the bookkeeping and accounting functions of a business can be a timely and problematic task that quickly falls to the backburner as day-to-day operations grow.
With that said, it is important for business owners to keep accurate records so that come tax time, you aren’t scrambling around stressed as can be. Keeping organized records does not need to be something that makes you cringe as there are a few easy, secure, and mess free options available. Read on for five bookkeeping tips sure to make your life simpler.
1. Choose the Right Tools
One of the biggest problems businesses face with their bookkeeping process is finding the right accounting application that suits their short-term and long-term needs. There are quite a few applications available to businesses, each of which has unique pros and cons. QuickBooks Online, Xero, and Kashoo, for example, are cloud-based applications that give users important bookkeeping and accounting features such as invoice sending, electronic payments, and payroll management.
To choose the right accounting package, make sure you research the functionality and reviews of each application and compare them to the daily tasks of your business. Keep in mind that your business is probably growing, and may be in a different financial situation a year from now. With that said, it is generally best practice to choose an application that your business can grow into.
2. Outsource vs. In-House Payroll
If you are inexperienced with payroll and get bogged down with crunching numbers, your best option might be outsourcing your payroll to professionals that are trained to do this work. Payroll is more than just signing checks—the hassle of keeping files 100 percent correct could be taking your time away from focusing on growing your business. Companies such as ADP and Payworks can do all the tedious tracking work for you as well as help you stay on top of calculating the taxes and fees associated.
3. Utilize the Cloud
With so much time spent on organizing and maintaining important accounting documents, why not use a tool that enables business owners to quickly upload and share documents with their bookkeeper and accountant? Not only does LedgerDocs make sharing documents easy, it also inspires collaboration by creating a virtual filing cabinet for business documents. LedgerDocs is compatible with both Mac and PC and also features a Dropbox integration tool that can connect your existing account with LedgerDocs.
4. Keep it Separated
Don’t fall into the trap of using your business expense account as a personal loan service for groceries, a new grill or other, unrelated expenditures. Resist the temptation to use this money with the condition that you will return the funds you borrowed later on. This practice can add confusion to your books, and you will end up losing out in the end. If you do this once, then it will become a tough and dangerous habit to break.
5. Make Time
This one may seem like a no-brainer but take time every week to review your books. It can be tempting to wait until tax time and let the paperwork pile up, but if you are just a little proactive you could save hours of time. Taking the time to review will also help you to be aware of your decisions and help you keep bookkeeping at the forefront of your decision making. Ultimately, you will be a more involved and knowledgeable owner if you know where your money is coming from and going.
Be sure to keep these tips in mind for simple, straightforward bookkeeping and an ever growing business.