Bookkeeping is the record-keeping of your business’s financials. Without a proper plan of action, your business has a chance of failure.
Although year-end bookkeeping tips are extremely important to your small business, it is important to know your numbers year-round. Set up a clear process and follow these bookkeeping tips.
Understand the Components of Bookkeeping
Before starting your bookkeeping, you must understand what the components of bookkeeping are. The four main components include accounts payable, accounts receivable, payroll, and bank reconciliation.
Additionally, your business bookkeeping may include cash, inventory, loans payable, sales, purchases, owners’ equity, and retained earnings.
Use a Bookkeeping Software
Cloud-based bookkeeping software will make your life much more organized. Using these platforms makes it easier to keep track of your finances. There is no need to keep a paper trail because you can scan the receipts and invoices directly into the software. Regularly run reports to ensure that everything is going as planned.
Some useful software that you may want to use includes Quickbooks, Xero, FreshBooks, and Wave.
Set Financial Budgets
To not go over your annual spending limit, set a budget for your business. Create different categories for your expenses including utilities, marketing, donations, travel, and more. Review this budget yearly and adjust as needed. Roll over or invest any money that is left over at the end of the year. Get rid of ongoing expenses that no longer benefit your business.
Analyze Your Financial Data
Keeping your books orderly is not enough to make your business grow. You must analyze business reports. Track your data findings to see the increases and decreases in sales and expenses. These numbers help you understand what is working in your business and what needs to change.
Separate Your Finances
It is best to keep your business finances separate from your personal finances. Mixing the two makes it difficult to keep accurate track of business expenses. You should also get a separate credit card for your business to further separate finances. This will build your business credit, which is important when applying for loans.
Get Bookkeeping Help From the Professionals
Not sure how a bookkeeper will help your small business? Learn all about bookkeeper responsibilities first. It may seem easier to perform all the bookkeeping on your own when you are first starting, but once you continue to grow you might need to pass off that responsibility to another source.
Our professionals at PL Consulting and Bookkeeping Plus offer diverse services related to all your financial matters.
The PL Consulting team serves the Baltimore, Maryland area and beyond. We customize our services to each client. Your ideas are unique to your business, and we understand that. We help you maintain good records and financial statements.