Aside from satisfying the needs and wants of your customers and competing in the market, your business should also have bookkeeping practices in place.
Once you have established these, you’ll be able to monitor the financial health of your business which can lead to better corporate decisions and faster business growth. Having clear bookkeeping practices also ensures that regardless of the employee holding the position, he or she will be guided on how to manage the business’ finances. However, creating bookkeeping practices just for the sake of having one, is not enough. If you want these bookkeeping practices to become beneficial for your business, you should ensure that everything in the process is organized. Organization is vital when it comes to bookkeeping for your business will run smoothly.
A business’ bookkeeping involves a lot of documents. You’ll have to store income tax records, journals, ledgers and financial statements, just to name a few. Usually, businesses will have several copies of these documents in a year. This means that the longer period of business operations, the more documents the business has to comply with. If you’re clueless about how you can keep your business bookkeeping more organized, consider the tips below:
1. Separate your business and personal finances: When you’re running a small business, having one bank account for both your business and personal finances might seem harmless. You might think that your resources are still limited and there’s really no need to separate the two. Having this kind of notion should be the first thing you should change if you want to organize your business bookkeeping. You should have a separate account for your business finances and another for your personal finances. Once you do this, you’ll have a clearer picture of your business’ financial health without compromising your personal finances.
2. Track all business transactions: Regardless of how well-funded your business is, you can still run out of money during the early months of operations. This is especially true if you don’t track all of your business transactions. If you want to steer away from this direction, always take note of the money that enters or leaves the business. If possible, keep track of these transactions once finished. Don’t wait for weeks or months to record these. When you have real-time updates of your business transactions, it’ll be easy for you to reconcile your finances at the end of the year.
3. Use an accounting software: Nowadays, keeping your business bookkeeping more organized can be achieved once you use an accounting software. This software can do several bookkeeping tasks at the same time while ensuring that all of your documents are stored in place. Additionally, an accounting software can save your business time and money since everything will be automated and more precise.
4. Organize your paperwork and digitize: As mentioned, bookkeeping will require you to store a lot of documents. However, piling all of your ledgers and financial statements in one folder isn’t the way to go. Having an organized business bookkeeping means that you should follow a system in storing your documents. If you’re keeping hard copies of your financial documents, compile them in one file each month or year. If you want to have backup copies, scan your documents and store it electronically. These copies will be safe from any weather condition and even fire.
5. Hire a professional accountant: Most business owners don’t have any idea about bookkeeping, much more on organizing it. If you’re one of these business owners, hiring a professional accountant might be a more suitable option. When you have a trained and experienced professional on your team, you’ll be taught about bookkeeping practices which are applicable to your business. Working with them also means that you can have real-time answers to any of your bookkeeping-related concerns.
6. Review your books often: One of the most exhausting things to do in a business is to catch up a year’s worth of work in a few days because you didn’t realize how outdated your financial documents were. Doing this can compromise your business’ operations especially if these financial documents are needed urgently. If you review your books often, you’ll never have to go through this situation. Examining your finances frequently means you’ll have the opportunity to assess if there are any lapses in the process and come up with necessary solutions. You’ll have ample time to do all of these and not rush because it’s urgently needed.
Start From The Inside
Many business owners fail to see the importance of ensuring that their internal processes should be set and prioritized especially if it involves their business bookkeeping. As long as they have money and offerings for their customers, they think they can already survive the competition. Don’t commit the same mistake. If you want your business to be successful, start by coming up with bookkeeping practices which are clear and organized. This might be a time-consuming chore, but as long as you’re able to store and locate financial documents with ease, your efforts will be worth it!