10 Tips To Improve Your Business Bookkeeping Skills
Business Bookkeeping in Framingham, MA
Business bookkeeping isn’t complicated. With discipline and an eye
for detail, business owners can manage their own bookkeeping. A common issue owners face is the lack of time. But to be fair, there is time. Willpower is the true culprit. You see, proper business bookkeeping requires precision. One mistype on the computer or illegible handwritten receipt can cause discrepancies. But guess what? There are ways to simplify business bookkeeping.
Now, before we begin, you deserve an applause! Operating a business isn’t easy and those that continue to push the envelope are superstars.
Revenue uncertainty exists but the will to succeed is more powerful. That’s why you’re doing everything right! Amazing products, services, and customer experience are your bread and butter. So, let’s keep the momentum going. Grab a pen and paper. Your first tip is down below.
Keep Business and Personal Transactions Separate
Mixing these two types of transactions will make your head spin. Avoid it by maintaining separate bank accounts. And, be sure to process transactions under the correct account. In doing so, bank statements will display accurate information about your business deposits and expenses. Also, notate a description for each deposit and expense. The IRS may want an explanation of your transactions should you get audited. Recording transactions also minimizes future expenses. You’ll be able to identify monthly expenses, those that can be reduced and avoided. Remember, selling products and services are not the only way to grow your business. Calculating expenses accurately and reducing them is part of a successful business.
Uncertainty Is Inevitable
You’re earning profit. Awesome. Now, set money aside. You never know when an opportunity presents itself or if a rainy season is around the corner. Business success is not about affording the most expensive company car. It’s about growing a monetary safety net. Keep that in mind and you’ll thank me later.
Not Everything is Uncertain
Yep. Paying business taxes is expected and unavoidable. But, this doesn’t have to be a cringe worthy moment. Set money aside each month for taxes. Just like your safety net is growing, build your tax net. Maintain a monthly budget to feed this account and you’ll avoid late fees and trouble with the IRS.
Track Your Money
Cash flow is important to keep your business afloat and ride the tides. So, follow through with unpaid invoices. Create penalties for late payments to avoid cash flow interruptions. Of course, paid invoices means profit gain but it also takes care of the expenses like employees, utility bills, rent etc.
Categorize Your Transactions
Labeling your transactions to “deposits” and “expenses” are not enough. You need to be more specific without overdoing it. Depending on your business, your categories will vary. Some common categories are:
|Business Income||Employee Expense|
Proper categorization keeps your transactions organized and ready for reconciliation.
Reconcile Your Differences
Reconciling is similar to an audit. Basically, you are matching your own business financial records with your bank statements. It’s recommended to reconcile monthly to avoid carrying discrepancies throughout the year. Reconciling helps to ensure your records are accurate and accounted for. It also helps to identify suspicious transactions that could harm your business. Ultimately, reconciling on a monthly basis keeps you organized and prepared for tax season.
Track Your Miles
Your car can help reduce your taxes. Track your mileage when using your vehicle for business related travel. It’s easier now to keep track. There are many apps for mileage reporting. You can try MileIQ, Everlance, and QuickBooks Self-Employed:Mileage Tracker and Taxes. There are more on the market. But based on reviews, you may agree that these would work well for your mileage tracking needs.
Track Reimbursable Items
As a business owner, you may pay for expenses with your personal money. It happens. Hopefully, not too often. But when it does, log the receipt and record the expense. Maintain a professional cashflow balance for yourself by tracking reimbursable items.
Remember the Sales Tax
If you are selling taxable items, be sure to deduct the sales tax from the total sales. It’s common to forget and causes inaccurate reports.
No Receipt Left Behind
Every expense is important and needs to be recorded. Yes, even the small, petty amounts. They can add up and help claim deductions.
Of course, these 10 tips are not the end-all, be-all to business bookkeeping. However, they provide a general layout to operate business bookkeeping more efficiently. You may want to consider a professional to handle it or at least consult with one beforehand. Remember, Ash Wasilidas, CPA Firm is always available for consultations. Tell us about your business and we’ll determine the best bookkeeping approach. Call (617) 462-6651 or visit our CPA office at 945 Concord Street Suite 100, Framingham, MA 01701.