Getting a small business up and running, and off the ground, is a stressful process. Keeping your finances and bookkeeping up to date can be an equally stressful task especially if you lack the skills and knowledge.
Thankfully, there are a few things you can do to keep your books organized and to stay above water, so you will not feel overwhelmed when you start going over your finances. By putting them in place now, you can set up your bookkeeping experience in a more positive and productive way. Let’s dive into a few of these things we can do.
Record Everything
Small businesses often make the mistake of letting things fall through the cracks. No matter how small a purchase you make for your business you need to keep the receipts for all of these purchases. Make sure you get a receipt for everything you pay for relating to your business.
That pen you bought. The cup of coffee with a client. The lunch you needed to buy on your day drip around meeting clients. It’s not a lot of money at first but just as a dripping faucet eventually floods the house, small expenses soon make your account run dry.
This is especially helpful when you are just starting your business. You will want to know what expenses you have incurred relative to the income you have made. By recording everything, can assess whether you are spending money in the right places to make income.
Learn concepts related to business to ensure you stay in the loop, up to date, and know what things affect you and your business.
Don’t Mix Personal With Business
If you operate a small business, you might think that this point is not important “It’s all my money anyway”. Well, it can become very confusing if your personal and business expenses are all mixed in the same bag. You want to be able to see exactly what it is costing you to run your business so that you can make sure that you are no spending more money than you are making. It is a good idea to have two separate bank accounts, one for the business, and one personal.
This is important for tax purposes as well, as you will need to submit a Company Tax Return as well as a Personal Tax Return. If transactions from different accounts are combined in the same little bag, you will not be able to claim the correct expenses on your Tax Return. Resulting in extra expenses, and less money for the business at the end of the day.
It is your money, you can use it, but track it. You can bet your bottom dollar the revenue service will.
Always Backup Your Records
Always ensure that all your records are backed up on a regular basis. You do not want to lose all your hard work in recording all your expenses and have to redo all the work due to a Computer Malfunction or crash. Make you sure to backup your records in two separate places to ensure that if something happens to the one backup you have another one.
Don’t Let Bookkeeping Be an Afterthought
When it comes to bookkeeping for your small business, it can start to feel overwhelming if you don’t know where to begin. If you have too much on your plate to handle, the things you are less experienced in will likely be the first to get ignored.
Bookkeeping is often one of those things. But, ignoring your finances can lead to a big headache when you’re trying to handle taxes or look up purchases. As a business owner, it will end up falling back on you if you aren’t aware of what’s going on in your accounts. Understandably, that can be a lot of pressure when you’re already in charge of everything else.
If you’re struggling to keep up with your bookkeeping or you just don’t understand it as well as you should, don’t put your finances at risk. This does not have to cost you an arm and leg your bookkeeping can be done at a reasonable rate and gives you the freedom to concentrate on making a good income.