10 Things Every Small Business Should Know About Bookkeeping
1. Separate Business from Personal: Keeping your business expenses separate from personal will help you better organize your company's finances. After each quarter or at the end of the year, it will also be easier to consolidate your records by comparing them to the transactions shown on your business account. 2. Think About Paying Yourself a Salary: Paying yourself a salary benefits you by compensating for the work you are putting into your business. Depending on your financial goals, you can also use the salary to build your personal savings or investments. 3. Understand Basic Financial Vocabulary: Understanding the lingo of the financial side of your business will help you have better insight into the financial standing of your company and improve your bookkeeping records. If you hire someone to do bookkeeping for you, it’s still important to understand the basics of what is going on on the financial side. 4. Keep All Records Up To Date: It can be easy to get behind on your record keeping, but try to set up a plan to prevent you from having incorrect records. Pick a date on your calendar either once a week or once a month to record your transactions so at the end of the year it is not so overwhelming. 5. Prepare A Budget: When preparing a budget you are taking a look at future expenses and income to help improve your financial standing. Budgeting is a great way to build business savings, adjust monthly spending to prepare for bigger expenses, and decrease the stress of not knowing whether or not you have enough money for your business operations. 6. Set Up Reminders: Setting up reminders for various transactions is a great way to stay on top of your finances. Whether it’s a reminder to make a payment, send an invoice, or follow up with unpaid bills, constant reminders will help organize what needs to be completed. 7. Save All Items Used For Your Records: Save receipts, invoices, and any other items used for your bookkeeping records. Having your items saved digitally in a folder for each quarter or year can be a useful way to organize all of your transactions. It’s also a useful tool for when you are reviewing your records, so you can look back at any information you might have missed. 8. Know The Federal & State Laws: Understanding federal and state laws when it comes to your finances is essential. For instance, taxes are going to be a huge financial component you will need to understand as far as what can be written off, how to handle payroll, what documents you need, and other items. 9. Consider Using Accounting Software: When a small business first gets started, Excel Spreadsheets and paperback or digital accounting books can get you by, but it can get messy very fast. Using bookkeeping software such as QuickBooks can help keep you organized while also providing automations that make your financial responsibilities easier to do. 10. Hire a Bookkeeper: Hiring a bookkeeper can be essential no matter what stage your business is in. Outsourcing the financial side of your business is an amazing way to lessen the number of responsibilities you have and can improve the financial standing of your company.