While bookkeeping may be a mundane task for most small businesses, it is definitely one of the most important aspects of a successful small business. Errors, omissions and incorrect information can cost a company significantly when tax time approaches.
Below are some best practices to keep in mind when it’s time for bookkeeping.
If bookkeeping is not your thing, find someone to do it for you. Trained, skilled bookkeepers can help you efficiently keep track of all your income and expenses. They have the necessary skills to do the job quickly and efficiently and they will often prove as a second pair of eyes to find errors and make suggestions.- Use a good accounting software program. This will help you keep track of expenses and income into the appropriate accounts. You will know, at any given time, how much you’ve spent on office supplies this year, and how much your gross sales are, too. The ol’ ledgers have gone by the wayside. Use it to start the fire in the wood stove!
- Reconcile your bank and credit card statements every month. This will help ensure that you’ve not missed entries into your checkbook and that all money going out is tracked and accounted for.
- Be consistent. Set aside a certain time every week, or month, depending on the size of your business to organize your expenses and income and enter it into your accounting program. By scheduling time for bookkeeping, and sticking to it, you make the task less daunting than it really needs to be. Additionally, by paying your bills weekly, you save money by potentially avoiding late charges.
- If you invoice your clients, be sure to monitor your collection procedures and outstanding invoices. Payment terms should be clearly written on every invoice you send out. If you work off contracts, these terms should be mentioned in your contract, as well. Set terms at Net 15 or Net 30. When working on long projects, charge at regular intervals. Don’t wait until your bill is so high that if payment is not made you’ll be financially hurt. Cash flow depends not only on how much you make per hour but also on receiving payment in a timely way.
- Back up your data. This cannot be stressed enough. If you only have one copy of your bookkeeping data file, you risk losing all of your valuable data to a power surge, hard drive failure, or some other tragedy….and believe me, when you lose your data, it’s a tragedy. Whether you back up to a thumb drive, an external hard drive or an online backup service, it’s well worth any expense and time to take care of this important step.
- Keep a separate business checking account. Not only does this make you look more serious in the eyes of the IRS, it will also help you keep personal and business expenses separate and organized.
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Some companies hire full time, part time and even a freelancer just to let their bookkeeping tasks handled by actual bookkeepers or even virtual bookkeepers instantly.
Wonderful tips!! Good work Theresa!! Small businesses can be benefited by outsourcing their accounting and bookkeeping tasks. Here is another cost saving tool, I would like to share with you all. It would be really useful especially for the small business owners, freelancers and even entrepreneurs. It is Billing Boss which takes care all your billing tasks.
Billing Boss is an online tool launched by the business management software providers The Sage Group plc. You can create instant invoices and send it to your customer for free of cost. It’s highly secures and your data and your customer information is encrypted and stored in a state of the art facility with regular backup. You don’t require any software to download and install as it is a free online tool. It has been widely used by the freelancers and the small business owners. To get a quick access, visit http://www.billingboss.com
Hope this helps !!
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For many small business owners, hiring out is the best option. And it keeps your sanity.
Some great solid tips there, thanks for the informative post
hiring a local bookkeeper would be the best solution since business is small it wouldn’t be that hard or the risk for error is smaller. It’s an investment.
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