Bookkeeping Tips For Small Businesses

Bookkeeping can be a nightmare, but whether you like it or not, it’s something all small business owners have to do. For many of us, the idea of doing an hour’s worth of paperwork seems rather menial, but when you get the hang of it, you’ll find that bookkeeping isn’t nearly as tedious as you initially thought. 

Well, mastering the art of good bookkeeping is a completely attainable feat, and you’ll thank yourself later for doing it. In this article, we will give you some tips to help you stay on top of your bookkeeping. 

What is the role of a bookkeeper? 

Bookkeepers are individuals responsible for helping businesses track how their money is spent. Their responsibilities will include keeping receipts and other important documentation and data filed accordingly. This ensures that when tax season comes, everything is in order. 

On a day-to-day basis, bookkeepers will document transactions, prepare accounts and ensure that your business’s admin is done correctly. In cases where a business can’t hire a full-time bookkeeper or doesn’t need to due to its size, the owner of the business would usually do all the bookkeeping. 

Should you hire a bookkeeper, or can you do it alone?

This is completely up to you. Many small business owners manage their own bookkeeping because it saves them money. But you must remember that bookkeeping takes time, time that can be given to growing your business in other ways. 

So, you need to weigh up the cost and value of that time you’re using for bookkeeping and see if using that time elsewhere would be more profitable. If the end justifies the means, then get a bookkeeper; if not, then keep doing it on your own for a bit. 

Booking keeping tips for small businesses

Whether you’re hiring a bookkeeper or doing the books yourself, these tips will help you do them more effectively. Here are some bookkeeping tips for small businesses:

Stick to tax deadlines

Tax is something you don’t want to mess around with as a business. The Australian Taxation Office has strict rules about meeting deadlines and might impose penalties on companies that are late. Be sure to check dates regularly so you’re always ready before they come around. 

Automate as many processes as you can

You might think that this sounds like a bit of a cheat, but with AI and modern automation systems, you can do five tasks at the click of a button. Remember how long it took to record data on a spreadsheet? these days, you can create an algorithm that captures and allocates data for you, making bookkeeping far more efficient. Look for bookkeeping software, like SAGE, to help. This will connect to your bank accounts, tally your records and help accountants work through your tax data faster. 

Check your financials regularly

It’s easy to overspend or let the paperwork pile up, especially if you’re really busy. But if you leave your paperwork for too long, you might miss something important, like bounced checks or overdue invoices. Checking your financials means going over transactions, checking emails, and client documents to ensure you’ve seen everything you need to. 

Separate business and personal finances.

With a small business, it’s easy to just funnel all your expenses through the business. That includes personal and business expenses. However, this is a one-stop shop for getting confused between the two. Remember, certain personal expenses won’t be tax deductible like groceries or your sports club fees. In most cases, businesses are considered their own entities, and they’re one financial life. Blending your personal and businesses could blur this line. So, try to keep your business and personal expenses separate if possible. 

Get professional help

When business gets busy, it can be challenging to stay on top of your bookkeeping admin. This is when we’d suggest getting in a professional to help you. Hiring a professional bookkeeper has its benefits. For one, it frees you up to focus on building your business. A professional will also know the ins and outs of bookkeeping, offering you better service and improving your operation. 

Perform Quarterly Reviews.

This fits in with checking your financials regularly, but performing a quarterly review will help you check how well your business is performing and help you identify areas that need improvement. Having your paperwork in order will make these reviews much easier, as you’ll have access to the information needed to do a good review. 

Keep records of business expenses.

Record all of your business expenses. Viable business expenses can be considered as tax deductible, but the ATO might want evidence of those expenses, especially if they relate to an asset that you’ve bought. Keeping slips or invoices is a great way to track expenses. Apps like Expensify offer individuals or businesses a convenient method of recording slips. You might want to check it out. 

Track employee hours easily with time-tracking tools

By using cloud-based time-tracking tools, your employees can clock in and out with their smartphones, tablets, or computers. It’s a breeze for them and simplifies things for you by automatically keeping tabs on overtime, PTO, and more. These tools are available for various industries, so pick one that syncs with your bookkeeping software to make payroll a cinch.

Stay on top of payments

Late payments can quickly drain your business’s cash flow. Monitor your accounts receivable closely and promptly follow up with customers who miss their due dates. Even if a customer is facing financial challenges, you can often work out a payment plan to recover at least part of what you’re owed.

Final Thoughts

Bookkeeping for small businesses doesn’t have to be stressful or difficult. Startups and business owners with a large capacity can manage their bookkeeping themselves until they grow. For larger businesses, having a bookkeeper is a good investment, as it’ll save them time and possibly money.