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Sunday, September 26, 2021

Top 5 Bookkeeping Practices for Small Businesses

Ribbons were cut, music was played on high volume, and feet didn’t stop moving to the beat.

Yesterday was the official opening of your business. It must’ve been great to run a business on your terms, finally.

But now, it’s time to get serious. The initial excitement has waned a lot as you see bills starting to mount every month.

There is no sugar coating here; running a small business requires hard work and sometimes blood, sweat, and tears.

Also, you’re breaking into your niche industry that’s already overcrowded with top performers.

However, remember that the same managers of today’s top companies also had their fair share of doubt and worry when they first launched their business.

If you’re concerned about your finances and want to be more organized, check out these tips on bookkeeping to get started! 

1. Don’t Mix Personal with Business 

First, if you’re running your business, you should separate all expenses that concern the company from your costs.

Imagine you buy a new AC for your apartment and forget to mention it on your expenses sheet.

At the end of the month, when you’re going through your financials, you see 1000$. There’s no other information.

What is this additional expense? You’ll never know.

Hence, to avoid future mix-ups, you can create a bank account specifically for your business to organize all your expenses. This way, your costs will not meddle in your business ones, and you’ll get a better picture of the ongoing cash flow of your company.

2. Save Some Money for Taxes

No one likes to give away hard-earned money, especially to the tax collector.

However, there’s no running away from them when they start ringing your phone or stopping by at your company.

Instead of postponing, try to set aside a specific amount every month to cover your tax expenses.

At least you’ll not get a headache at the end of the month!

3. Keep Track of Expenses

Let’s say you’re running a law firm.

You know that sometimes your associates have to organize out-of-office meetings with clients.

How are you going to calculate the car mileage? You can’t rely on an outdated system such as paper bills which can get lost or forgotten.

The best you can do is to get a business credit card to manage your expenses better. 

4. Get a Bookkeeping Software

Forget the days when you had to go through stacks of papers just to get a hold of that one sheet you need.

The age of technology means you have to be informed of any new industry advancements. If you want to increase your profit, you’d like to use the latest technology to monitor your incoming and outgoing cash flows better.

Moreover, accounting software can drastically decrease your time spent on record keeping and increase your overall work efficiency.

Finally, if you want to try cloud-based accounting software (where your data gets stored safely and securely in the network), best to contact a small business accountant in Toronto to provide you with the necessary information.

5. Stay Up-to-date with Your Accounts Receivable

Calling up clients or companies that owe you money can be exhausting if you haven’t devised a proper payment system for your accounts receivable.

That’s why it’s crucial to create a system where the date of money borrowed, the amount to be paid back, as well as the date when the payment is overdue, should all be recorded.

Moreover, if there’s an agreement to pay in installments, your records should also state the correct amounts of each installment.

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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