Small Business Bookkeeping Tips

Five basic small business bookkeeping tips to help your business…

One of the most important aspects of running a small business (as opposed to a big business that can simply call down to the accounting department) is successful bookkeeping. It keeps everything organised, remains on record in case evidence is needed or you simply need to refer to an old transaction and makes filing tax returns a lot easier. The following tips should help you maintain affective bookkeeping so that you can spend your real energy on running the business and making profit.

Choose The Right System For Your Business: There are two recognised bookkeeping systems, the cash based and the accrual based. Within a cash based system you enter records when you receive income and when you’ve paid expenses, as and when they physically happen. In an accrual based system you enter records when the action takes place but not necessarily when you receive your income or pay you expenses. The accrual system works when there is a lot of credit based transactions.
Utilize ICT: Come on people, in this day and age you need to use a computer to help you, not only with the sums but with the organisation. 10 years worth of accounts can fit in one spreadsheet with the ability to search and edit with the click of a mouse. 10 years worth of a paper based system means stacks of files, scruffy bits of paper, hard to read handwriting and scribble!
Stay On Top: You should keep your books and records updated on a daily basis. At the end of every day go through, collect receipts, add up the sums and keep your books clean. In some businesses waiting a week to update your records can be very hectic. You may misplace something, forget that you put some cash aside or you may make errors due to the large amounts of data. If you wait months or even the whole year you’re setting yourself up for big trouble. If you want to have a firm grasp on the financial stability of your business then daily bookkeeping is a must.
Once one year is over, don’t throw everything to one side or buy a new computer without transferring you info over. Keeping an audit trail is a must because if the tax man comes knocking and wants to go over something from 5 years ago, if you can’t come up with the goods they win be default, even if they are barking up the wrong tree.
If you are self employed is very easy to treat your business as if it is your finances. But you should be treating it as if it is a business’s finances. Keep personal transactions and business transactions separate so you don’t count your daughter’s ice cream Sunday as a business expense.

The bottom line is to keep everything organised and at hand at the end of every day; so it 3 months you will still have everything organised and at hand.

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