Bookkeeping for small businesses: 6 tips to get started
Bookkeeping is an essential process for small businesses. Keeping detailed information about income, expenses and investments can help entrepreneurs understand their finances better, make informed decisions, and effectively manage operations and expectations for the future.
Learn six tips to do start bookkeeping for you small business.
Keep track of all your expenses
As you launch and operate your small business, it can be easy to lose track of the little expenses you’re incurring. This is why it’s important to keep organized receipts for all your business-related expenses, which may include office supplies, equipment, shipping, travel, meals, and other expenses.
Stay on top of your invoices
Speaking of losing track of expenses, it’s just as important to keep track of your invoices. Sending invoices on time can help ensure that you get paid for your work and services on time, which helps with cash flow and accuracy on your finances. This is also known as accounts receivable.
Reconcile your accounts frequently
There may come times when you lose track of your income and expenses, and bookkeeping can fall to the wayside. But it’s important to reconcile your finances regularly to understand how your business is performing–and whether there are critical actions you need to take! Reconciling your accounts may mean reviewing your income statements, balance sheets and cash flow statements.
Bookkeeping is not the same as accounting
While many people confuse bookkeeping with accounting, there are differences between the two. Bookkeeping allows you to compile and record income and expenses in your business, while accounting allows you to interpret that information. You can’t do good accounting if you don’t properly do bookkeeping.
Don’t stress if you can’t do it on your own
If you don’t think you have the time to do your own bookkeeping or don’t know how to do it, you can invest in a professional. Professional bookkeepers can help you collect and organize data to ensure that you can properly interpret this financial data.
Separate your finances
We can’t stress this enough, but it’s critical for small business owners to separate their personal finances from their business finances. This will help avoid any confusion come tax times and give you peace of mind. For example, open separate business banking accounts, separate small business credit cards, lines of credit, etc. Taking these steps will ensure that you’re protected, should something come into question.