If you are neither an accountant nor a fan of working with numbers, probably bookkeeping is not a favorite task for you. You can always look for outsourced bookkeeping services in such a case. Early adoption of some good habits will help you avoid costly errors with respect to proper record keeping. You probably do a lot of Small Business Bookkeeping in your head: which customers are outstanding, which supplier you need to pay, etc. DIY ensures that you do not need to hire CPA firm.
When you do not have a process and system in place, goals can be missed, unpleasant surprises can come up and paperwork of importance forgotten. Better handling your money as a Small Business can help you smooth out the seasonal cash flow ups and down, make & keep long term goals and even improve profit. This can be of help to be free from the troubles of the IRS.
Top 5 tips for small business bookkeeping:
1. Plan for major expenses
Honesty in your major expenses for the next one to five years is important. Are you planning to upgrade your facilities? Is the equipment in your office on its last leg?
By proper forecasting of your planned major upgrades, or peaks in staff costs, you will be able to avoid excessive money withdrawal from your company in good months and not being able to meet up in the slow months.
2. Track your expenses
It may seem difficult to track expenses, meaning that tax write-offs could be missed. Adopting the use of business credit card could help you keep on your expenses together and well tracked. Most of the service provider are now categorizing your bill into expense type ensuring less task for you to do.
3. Make proper deposit records
Whether it is an excel spreadsheet, notebooks and pencil or financial software, endeavor to keep track of money deposited into your business account.
4. Set aside money for taxes
You are aware of the fact that tax is compulsory and you must pay. You have to systematically set aside money for it. Penalties and interest are incurred on unpaid taxes. Ensure that money is there when you need it. Setting aside money each month or when the contract is undertaken makes it easier.
5. Keep an eye on your invoices
Unpaid and late bills could hurt your cash flow. Let someone be in charge of your billing. Put a process in place for an unpaid bill. That may be issuing of the second invoice, putting a call through to them or levying penalties at certain deadlines.