On average, small business owners spend 10 hours each week recording, organizing and processing financial transactions – everything from accounts receivable and payable to employee payments, expense receipts and supplier invoices.
While the process may be time consuming (and tedious!), effective bookkeeping is the foundation of sound financial management which, in turn, is the lifeblood of your business.
Feeling overwhelmed by mountains of paperwork and complex calculations? Here are some bookkeeping basics for small business owners to help ensure a healthy financial future.
Diligently track your expenses
Accurate and consistent expense tracking is crucial for claiming tax deductions and reducing your overall tax bill. Plus, analyzing expenses can offer crucial insights into spending patterns and the overall profitability of your small business.
Small business owners should consider using a mobile app for simple, consistent expense tracking. There are many options available that help do away with manual data entry with automated functions, including:
- Receipt data capture via your smartphone’s camera (no need to hold onto paper receipts which can be lost or misfiled);
- Synchronization with your phone’s GPS to track mileage of business travel; and
- Importing bank and credit card data, plus integration with accounting software.
Systematic invoicing and filing
Efficient invoicing is more than ensuring you get paid in a timely fashion. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in your bookkeeping process. Here are a few tips:
- Ensure each invoice includes all the important details such as contact information, a tracking number, a detailed list of products or services rendered and a breakdown of the total amount due;
- Provide an electronic receipt to reduce waste and create a “paper trail” if there’s ever a dispute; and
- Maintain an invoice filing system that records when you sent the invoice, to whom, when payment was made and any reminders sent out.
An online invoicing tool can streamline this aspect of your bookkeeping processes and provide an efficient backup filing system.
Save time with accounting software
Every business is required to keep organized and up-to-date records for at least five years. However, manually recording income and expenses to ledgers and journals is time consuming and stressful. Shave some time off your bookkeeping jobs with an accounting software program such as MYOB or similar which offer advantages such as:
- Instant reports giving up-to-date profit and loss statements, customer accounts, payroll details etc – your overall financial “big picture”;
- Simplified data entry so you can collate and print invoices, purchase orders and payroll much faster than with manual methods; and
- Improved accuracy through automation.
When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long term profitability of your small business. Be sure to regularly make the time to update and review your books to see how your business is performing.
Here at BSN & Co we have experienced bookkeepers who can help you manage your business. Visit our bookkeeping page to find out more (link to page)
Also, check our recent blog – Why bookkeeping is crucial to your success