Did you know there are 30.7 million small businesses in the US? What’s more, out of these, 433,000 are start-ups. For most business owners, learning how to do bookkeeping for small business is essential.
Many business owners feel that accounting is one of the more challenging areas of running their business. Properly managing your finances is key to keeping your business growing and succeeding. If you’re struggling to find the best way to manage the books, keep reading to learn more about bookkeeping for small businesses.
Primary Steps to Keeping Your Books
The idea of keeping books, online or physical, can seem overwhelming to a new business owner. When you get down to it, most of these are straightforward.
It’s is essential to consider that both accounting and bookkeeping exist to meet these two goals:
- Keeping track of your income and expenses
- Collecting the data needed for tax filings
How you keep your financial records is up to you; however, the method of accounting for some businesses must be either the cash or accrual method.
Cash accounting is a cash flow based method. On the other hand, accrual accounting relates to when transactions happen.
Keeping your books up to date is straightforward when broken down into these three steps:
- For every payment and expenditure, keep receipts, invoices, and other financial records (monthly, weekly or daily)
- Periodically summarize your income and expenditure documents
- Create simple reports from the summaries that will reveal profits, net worth, and additional similar information.
No matter how you manage your accounting, it works the same, whether by hand or on a computer.
How to Do Bookkeeping for Small Business
Juggling all the things you need to keep track of as a new business owner may put bookkeeping a lot lower in your priority list. When your to-do list keeps growing, it’s easy to think you’ll get to it later, but later, it can quickly turn into too late.
These few tips can help you prioritize the financial points to focus on in your bookkeeping. They will help keep you ahead of economic disasters and know where your business stands.
Look After Your Receivables
When you issue an invoice, it means that client needs to pay you and with the time on the invoice. Keeping a log of due invoices helps you keep track of what’s been paid and outstanding.
Review Cash Flow Statements Regularly
Doing this weekly is essential. When you are reviewing your finances, running a cash flow report is a good practice.
Record Expense Receipts
One of the typical errors small business owners make is not recording expense receipts or keeping copies of expense reports. Issues that result can vary, but span from taxes to cash flow issues.
Separate Business From Personal Accounts
It’s easy for you and your accountant or bookkeeper to see how money is being spent if you maintain separate bank accounts for business and personal transactions. Using a check stub maker when paying workers or yourself is another excellent practice and simplifies record keeping.
What’s In The Future?
Making sure you’ve learned all you can and know how to do bookkeeping for small businesses will have you on your way to building your business the best way.
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