Most business owners dread going through their books of accounts. After all, math is not for everyone. But whether you like it or not, double entry bookkeeping is a vital recipe for the success of your business.
You need to be involved in your business’ finances. The books are your scorecard to determine your business’ performance, helps you to work faster, and be more efficient. Here are seven sure-fire tips for proper bookkeeping
- Getting the right software
Bookkeeping software came in handy when business owners had to record their financial transactions manually. It was an uphill task calculating figures and recording data.
Today, we have thousands of bookkeeping software to choose from which come in different levels. These levels include;
- Ledger and cashbook
- Ledger, cash book, and inventory.
As a small business, you don’t need expensive software. You are on a tight budget, but you still need software that is easy to use and understand. The software should perform functions such as help to invoice customers, combine different aspects of reporting, and produce charts for references.
- Time-Tracking Software for Employees
The employment industry is changing fast. Today, most companies pay their employees for the time they have worked and the output. This way of payment strengthens employee performance and puts aside those who don’t work hard.
As a small business, you should start preparing for the future by paying your employees by the hour. How do you count the hours? There are many cloud-based tracking software that records the time an employee clocks in the office, used a computer, and the amount of work done.
These software eases bookkeeping records. You only have to log in and determine how much you owe your employees, the overtime they’ve worked, and vacation. Look for a tool that resonates with your payroll for easy integration during payment.
- Keeping A watch on Late Paying Customers
If you don’t act on time, late payment customers can degrade the financial position of your business. You depend on their payment to pay your employees and keep the business functioning.
The best strategy to avoid this is reaching out to the customer fast when they are overdue. Ask them when they will make the payment. If they have financial difficulty, draft a payment plan. The plan should not infringe on both parties.
- Separate Personal and Business Finances
Mixing finances is common mistake business owners make when doing their bookkeeping. And the result is not good either. You find yourself tangled in a tax web that may tarnish both your personal and business financial records.
To avoid the long days of pain in the future, open a business bank account that’s under the business name. Also, get a business credit card to start making the credit rating that is separate from yours.
- Record all your Business Expenses
Many changes take place in the taxation sector every year. You don’t want to find yourself at loggerheads with the taxman. The best way to do this is to ensure you record all your expenses. A simple act like scanning the digitized receipts will save you time.
Ensure that you also notify your accountant of any purchases you make. He should have a say in the investment if it’s worthwhile to the business or not.
- Do Frequent Check-Ups
Whether it’s a weekly, monthly, or quarterly check-ups, they’re essential as you can identify trends that affect your business. If they’re positive, leverage on them, if they are negative, solve them.
For instance, you’ll notice some of the customers that pay late. You can reach out to make a payment plan. Or you may see that one of your product records high sales than others. You can get more inventory to keep up with the demand.
- Don’t Introduce New Systems Without a plan
There are thousands of systems available today that might increase your business’ performance. However, implementing too many of them may do you more harm than good.
Your employees are human beings. If you swamp them with many systems, the chances are that they’ll lose time learning the new system. They’d instead use this time doing important stuff that brings more income to the business.
Implement a system only if it is promising, but do it in a strategic way that does not affect the performance of your business.
Bookkeeping, including legal bookkeeping, is not for everyone. However, with a few tips we’ve given you above, you can pull it off. If you need someone to hold your hand on your quest to becoming an expert in bookkeeping, you should check out this Bookkeeper Business Launch review. This course will teach you the ins and outs of bookkeeping which is what every business owner should know.