For many small business owners doing the books (bookkeeping) is the task which is faced, or avoided, with the most trepidation.
Particularly if you don’t keep your records regularly throughout the year and end up at the tax deadline faced with shoeboxes full of papers that make no sense.
Many business owners make the fatal mistake of starting out by trying to do their books themselves, to save money. But then end up falling by the wayside as all the other tasks related to running a business take over and the books end up left undone.
The good news is that technology is making life easier with accounting software packages making it possible to snap and record receipts as they come in, assigning them to expenses immediately.
This can save a lot of time and effort.
However, even with this type of accounting software on board you still need to manage all of the transactions and assign them to specific categories.
For many though, even the idea of accounting software seems daunting so the other option would be to keep a simple manual spreadsheet of income and outgoings.
Our friends at Crunch.co.uk say that the other option is to decide not to do the bookkeeping yourself but to use a professional bookkeeper to do the job for you, which then takes all of the hassles out of your hands.
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4 Steps to Make Small Business Bookkeeping Easier
Whichever method you opt for, you need to make sure you keep all of your receipts so that everything matches up. Here are four steps which make small business bookkeeping easier for you:
1. Choose the bookkeeping method which suits you best
When you set up your business you need to decide which bookkeeping method you are going to use, to make sure you get all of your finances off to a great start from the very beginning.
Whether you opt for a manual system, an accounting software system or a small business bookkeeping service, you need to make sure it has all of the tools and services you require. Don’t rely on a free software tool before checking out all of the features and aspects which it includes.
It’s also important to be able to keep your financial information safe and secure so consider this aspect if you are opting for a cloud-based service. Also if you are transferring information through to your bookkeeper you need to make sure it is secure and encrypted.
2. Keep things simple
While your records need to be up-to-date and accurate they don’t need to be overly complicated. Particularly if your business is simple with money and money out transactions which can be recorded easily.
It can be tempting to create categories for everything and to make it all over complicated. But this will only make your job harder and make life difficult for your bookkeeper.
As long as all the records are dated and accurately stored, it should be fine.
If you make it overly complicated you will end up spending way more time on bookkeeping than you need to. This will become burdensome and time-consuming in a way that doesn’t need to happen.
3. Do the books regularly
Leaving the bookkeeping to the last minute is never a good idea. It’s much easier to set aside time every week to go through all the receipts and record everything.
It will take far less time in the long run and will make the task of bookkeeping far less onerous.
It’s far easier to manage the books if you keep on top of the transactions and record everything as it happens.
Otherwise, you might find yourself looking at a pile of receipts and finding it impossible to remember the reason for spending the money.
4. Keep all of your financial records
As a business, you need to keep your financial records for a number of years in case the tax office decides to carry out an inspection.
Make sure you have a system in place to keep all of your financial information safely and securely.
If you keep paper records you need to make sure they are locked away safely and securely and preferably kept somewhere secure away from the office, perhaps at your accountant’s office, for added security.
The other option is to store everything electronically by using a secure storage area with folders, where you can keep scanned documents and copies of invoices etc.
You could look at free cloud services for this purpose.
Don’t forget to download and store any receipts which were sent through to your business email as you need to keep copies of everything.
It can be easy to miss items like this which is why it’s important to carry out the bookkeeping as you go along, rather than all in one go at the end of the year.
Summary: Small business bookkeeping Made Simple
While bookkeeping can feel overwhelming as a new business owner, there is no escaping it if you want your business to be successful.
It’s important to know what money you have coming in and going out of your business so that you can make strategic decisions and adjustments as necessary.
The four steps outlined here will go some way to helping to make bookkeeping easier. However, the most important thing to remember is the need to keep records of everything and receipts for all expenses.
The worst thing you can do is to put off the bookkeeping until the last minute and then scramble around in a panic, with piles of paper receipts, or costs without any receipts to back them up.
Books which are in a mess, out of date and not accurate can cause immense problems for any business both legally, with the tax man and inhibiting the day to day running of the business as well.
Knowing and understanding your books and finances is a key skill which every entrepreneur needs to have in order to be successful.
Whether you opt to do it yourself or accept that you need professional help and support – you still need to understand money in and money out.
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Cheryl Davis is a freelance writer. She writes about business, personal finances and anything accounting-related.