[Today’s guest post was written by Sarah Boisvert.]
As a small business owner or entrepreneur, you know that bookkeeping is a necessary evil that will come back to haunt you if not handled properly. The implications of overlooked—or worse yet—ignored bookkeeping duties can mean tax penalties and fees, reduced cash flow, and minimized profitability.
Here are five tips that are easy to implement to keep bookkeeping duties from driving you crazy.
Set Aside Bookkeeping Time
Entrepreneurs are usually driven by sales and marketing or time spent in the lab developing technological breakthroughs. One hundred percent of all available time will be sucked up by these endeavors if left to our own devices. So, it’s imperative to set aside time for bookkeeping.
Make an appointment with your accounting software each week that is off-limits to other meetings. While the amount of time necessary for your company may vary, set aside at least one to two hours in your schedule for bookkeeping chores. If you get done sooner, you’ll have “found” time to do something else, or better yet, take some personal time.
But without a bookkeeping appointment, other tasks are deemed “more important,” and necessary financial data to run your business will not allow you to make astute decisions.
Choose a software package that is geared to small business and the busy schedules of entrepreneurs. Good accounting software such as QuickBooks will save you time by integrating all bookkeeping functions and will even allow you to write checks, pay bills, and do payroll all in one software package.
Further, easy-to-use software doesn’t mean you need a CPA to do your own bookkeeping or have a high-level employee as you get started. The software can grow with your business as you gain more staff.
While a lot of business is conducted online, there is still paper required for bookkeeping that comes in the form of invoices, etc. While this may seem simple, be sure to open those envelopes and have a paper system to capture their information for bill paying, etc.
A simple tickler file organized by due date can ensure you pay bills on time, reducing late fees and keeping your credit rating in tact.
If you have even one employee, consider using a payroll service over doing the associated bookkeeping yourself. Not only does a service pay your taxes and file reports for federal, state and local jurisdictions, they also keep up on changes in the tax law, saving you valuable time better spent on your own area of expertise.
A payroll service will calculate all deductions and generate payroll checks, so if you are traveling under one of your other business hats, employees are paid on time. You only have to report hours per person to get the ball rolling.
Make it Easy by Taking Notes
Bookkeeping is easy if the paper trail is well defined. If you pay for allowable business expenses with a company credit or debit card, it’ll be easy to see what needs to be recorded. Likewise, if you take in income, be sure to have some simple recordkeeping so that you remember from whence the funds came.
For example, if you gave the business some cash, it is treated differently than if you got the cash for goods and services. The difference is whether or not you pay income tax on the revenue. Be sure to write down how funds are either dispensed or generated so you can easily record them in your bookkeeping.
Bookkeeping may be a necessary evil, but with a few tactics, it can become a routine aspect of your business. And more importantly, it will be an important tool for solid financial management during your growth years.
Sarah Boisvert is an author working in business and technology. She covers marketing, sales, finance, social media, and mobile platforms. She also has expertise in manufacturing including 3D printing.