The nature of most business owners is to place value on endeavors were the odds of success are higher. Marketing, business promotions, R&D are some that come to mind. While some love the number-crunching of bookkeeping and accounts, others hate to detract from business operations to focusing on minuscule details of their day-to-day finances.
Love it or loathe it, Bookkeeping is an essential part of running a successful business. According to a US Bank survey, 82 percent of business failures are due to poor cash management. Business owners that fail to prioritize bookkeeping as an integral part of their everyday process open themselves to a slew of legal problems; starting from bad debts, irregular cash flow, improper deduction during tax filing and late payments of tax.
In this blog, we unveil a few basic procedures that successful business owners have adopted to stay on top of the paperwork.
Record all expenses:
Almost all businesses have a set of supplementary or ancillary costs that often fall through the cracks and do not make it to the budget. For instance, a lunch meeting with a client, or every time new software or equipment is purchased, although the cost of equipment might figure in the purchase, associated costs such as training, time and maintenance costs involved in the process might have been missed. These results in an underestimation of the actual costs involved.
Besides, a complete record of all payments will help you recover tax-deductions while filing your taxes.
Strive to keep your books clean:
Clean bookkeeping ensures that your income and expenses are always organized, balanced and compliant to statutory norms.
Make sure that you do not intertwine business with personal expenses. Stay compliant by creating a checklist of all required statutory reports including due dates, type of tax, report, the period covered, etc. Put aside a portion of money throughout the year for taxes, note tax deadlines on the calendar, along with prep time, to make sure payments are made when they are due.
Optimize bookkeeping via automation:
Manually entering data to spreadsheets and calculating reconciliations has become a regressive approach in the face of digitization. Software products like Quickbooks give you a viable option to save time and money by directly syncing with your financial records and processing critical data instantly with minimized errors. Cloud-based bookkeeping software also gives you a secure storage repository of all financial data that can be easily retrieved without going through bundles of paperwork. This also helps to audit-proof your account.
While transferring data from paper to computer, one can run a dual system for a few months, and when both the systems have the same totals, the paper trail can be dropped.
Regularize statement monitoring:
Request for statements with a month-end cut-off date, and save time when reconciling records with the bank statement every month. Do not file statements and canceled checks without reviewing them and review statements immediately for unauthorized checks. Maintain separate folders every year for paid invoices and bills, and go for numbering of the folders for all clients for ease of use and reference.
Track business progress:
Discover financial mistakes, bank errors and invoicing errors that are crippling your progress. Bookkeeping helps to know exactly where your money is going and how much you gained – allowing you to make sound financial decisions.
Always envision and plan for your future expenses. Foresee major expenses and on how to obtain capital. Analyze your records for cash reserves and inventory value. Look for potential areas to sustain business growth and keep the cash flow consistent.
Outsource as you scale:
Outsourcing your bookkeepingmay prove the most cost-effective and reliable model to ensure that your records are handled by seasoned experts and at a much cheaper cost to establishing your in-house bookkeeping team. Outsourcing also enables you to spend your valuable time on core processes while offloading your bookkeeping and accounting records to a specialized source.
Consistency is the essence of successful business bookkeeping. For most small businesses, the most common bookkeeping errors are also the easiest to fix. Getting a better handle on bookkeeping can help make and keep long-term goals, smooth out the seasonal ups and downs of cash flow and improve business profits