Once you start a business, you’re expected to quickly absorb information on new topics and perform several tasks you’ve probably never done before. And, unless you’ve had prior business financial experience, coping with a business’s economic side is likely to be new to you.
These tips show you how to do bookkeeping and will increase your ability and knowledge to operate your business with skill.
- Keep Business and Personal Separate
Maintaining the company’s accounts is going to be challenging enough without mixing your personal income and expenses. You need to keep your business receipts and invoices for five years, and sort through a big pile trying to remember if that expense was personal or business four months ago is a waste of your valuable time. Establishing separate files, budgeting systems and bank accounts for your business expenses and income makes tracking and reporting much easier.
- Utilize Software
If your business is small enough, an Excel spreadsheet could satisfy your accounting needs for a while. But when your company starts to grow, you’re going to need a more effective solution. Accounting software can be a great help by arranging your invoices, cataloguing receipts and producing documents that you need to make sound financial decisions by clicking a mouse.
Many software providers offer different levels, here are some examples: –
- Ledger and Cashbook
- Ledger, Cashbook and Inventory
- Ledger, Cashbook, Inventory and Foreign Currency Transactions
- Ledger, Cashbook, Inventory, Foreign Currency Transactions and Point of Sale
- Some software options, such as FreshBooks, are specifically made for business owners who just want to focus on invoicing their customers and tracking expenses and who give access to the accounts to their professional bookkeeper or accountant to process the complicated accounting stuff every month.
Most bookkeeping software modules mentioned above provide the ability to export various reports to Excel for:
- Easy manipulation and Customization
- Producing charts for quick reference or
- Combining different aspects of reporting from one period to the next
- Be Consistent
Bookkeeping is like any chore: the longer you procrastinate, the longer it takes to catch up. Sadly, avoiding the heap of reports and invoices won’t make them go away! Finally, you’re going to be forced to waste a day that you might spend with friends or family entering numbers and sending late bill reminders. Bookkeeping doesn’t have to be a daily chore, but do not wait until the end of each quarter to pull all that data together.
- Choose the Right Time
If you are most productive and creative thing in the morning, do not use that time to perform your accounting tasks. Determine the time of day or week when you can focus, but do not need optimal brain function to work. That is when you are supposed to catch up with your accounting. Set this as an appointment in your schedule and keep to it! If you are finding this difficult; and that you are behind no matter what, it may be time to add a professional bookkeeper to your support team.
- Hire a Bookkeeper
If nothing else works, just hire someone to do it. It may take 2 to 4 hours for a professional bookkeeper to process one month’s worth of bank transactions, finalize bank reconciliation, and produce a set of reports. You can outsource as little or as much as you want to do. You can ask a bookkeeping professional to carry out only one task or a combination of tasks whilst you or your employed office person does the others.
Below is a list of the most common tasks that are part of the bookkeeping process:
- Enter transactions to the cash book, to the correct account codes with the correct sales tax options.
- Process bank reconciliations for the main account, savings accounts.
- Prepare sales invoices.
- Enter purchase invoices.
- Prepare a creditors report and upload batch payments to the bank.
- Prepare a sales report and keep in contact with overdue debtors.
- Process payroll and set up payments to employees.
- Process payroll tax reports to the tax department and set up payment.
- Process sales tax returns and set up payment to the tax department.
- Prepare the monthly reports.
- Advise you on the actual state of your business finances and gives you ideas on how to improve cash flow.
The great thing about experienced professional bookkeepers is that they are usually able to give you great business advice over and above your day to day bookkeeping needs such as:
- Investigate new software and advise if any are a good fit for your business.
- Attend business meetings with you and your banker and help explain the accounts to the banker if you find it a little difficult.
- Help prepare your annual budget and cash flow reports.