Day to day bookkeeping is of course essential, but many small and medium sized businesses find themselves getting bogged down in it, leaving them with precious little time to focus on other aspects of their business.
Should the vital elements of day to day bookkeeping become overlooked, or simply skipped due to time and other constraints, your company will quickly find itself suffering. Keeping up to date with your bookkeeping, however, will help you to maintain a healthy cash flow within your business, and allow you to pick up on trends in your financial activities, early on.
How can you keep on top of your day to day bookkeeping?
- Ensure that you keep accurate and up to date financial records:
There are 3 basic sets of records that every business owner should keep, and these are:
- Cashflow book – all payments in and out of your company bank account should be recorded daily, and once you’ve been maintaining this for a few months, you’ll find that you’ll be able to use it to make financial forecasts, too.
- Invoice file for sales – sales invoices can easily be stored in an accounting software package, but if you do them manually, make sure that you keep a record of them all on file, and in chronological order.
- Invoice file for purchases – in much the same way that you should be filing your sales invoices, your purchase invoices will need to be filed in chronological order, too.
- For every purchase, get a receipt or invoice:
Try to ensure that you keep a piece of paper – whether it be an invoice or a receipt – for every single purchase that you make. Should you happen to be investigated by the IRS, you’ll have everything at hand, to show them.
- Keep your business expenses separate from your personal expenses:
Legitimate business expenses may include money spent by the company, but otherwise, that money is not yours to spend on yourself and the IRS can question any money spent that isn’t associated with a valid expense.
If you’re self-employed, you can take money from your own business, but keeping a separate bank account is still the wisest thing to do to avoid mix ups and confusion over any outgoings.
- Ensure that your bank statements are checked regularly:
It takes but a few minutes to do each month, and aside from helping you to spot fraud or errors made by your bank, it can help you to have better control over your finances, in general.
- Don’t neglect your bookkeeping duties:
Leaving your bookkeeping tasks until the end of the day, may seem like a good idea in the morning, but when evening comes around, your brain will not be as fresh and you’ll find yourself quickly making errors which could prove costly in the long run.
- If bookkeeping is getting on top of you, hire a bookkeeper to help:
Hiring a good bookkeeper would give you peace of mind and the freedom to focus on other important areas of your business, and they could potentially spot myriad ways in which you could be saving money, too. Not only that, but everything would be correctly and accurately recorded when it comes to tax preparation time.