Bookkeeping is an essential part of running your business. Your records are vital for tax time, but they also help you paint a clearer picture of your company’s financial health. Keeping detailed records can save you from unnecessary headaches and even run-ins with the law or oversight agencies. If you’re a small business owner, consider the following tips for keeping better books.
Invest in Reliable Accounting Software
Paper recordkeeping is ineffective and unreliable, not to mention extraordinarily time-consuming. Modern business demands speed, so you need the right accounting software to keep your organization efficiently (and legally) running. There are countless low-cost and even free accounting software options available, but it’s important to find one that covers every aspect of your business and offers some sort of backup service.
Track Records Daily
The best way to maintain an accurate idea of your business’s financial health is by reviewing records each day. This may seem like a tough task, but if you start your business with a habit of checking your records daily, you’re more likely to catch problems early. Regular bookkeeping also means that before long, the time you spend checking your books each day will only be a few minutes.
Treat Checks Like Cash
It’s easy to lose track of the checks you write, and it’s vital to have a system in place for managing checks. Even cancelled checks can turn into serious problems if someone happens to find them and attempts to fraudulently cash them.
Sync Your Bank Statement
Try to have your bank statement include a month-end cutoff. By synchronizing your monthly expenses with your bank statement, it will be far easier to reconcile your expenses. Always keep your personal finances and business finances separate. In the early days of your business, you may need to dip into personal funds to keep things going, but once you’re in the swing of running your company, you want all of your business records separate from your personal ones.
Prepare for Audits
You should be able to trace any financial records back at least one year. Make sure you have a system in place to find any irregularities should you face a tax audit or other oversight investigation. This makes it easy to find what you need and keep your business in compliance with any applicable regulations.
These are just a few bookkeeping tips to get small business owners started. Keep constant watch over your company’s finances so you don’t miss out on business opportunities and can easily keep things moving during your slower months.