As a business owner, we are sure you understand how easy it can be to get your business books in a mess. What amount is going out? What amount is coming in? If your business accounting gets too unorganized, you can being to lose control of how your business is running. While it might take some time to get your books organized, doing so does save you time in the long run. By knowing what’s happening with your business books, you will gain a better understanding of how your business is performing at all times.
The efficient management of your small business accounting can and will help create success for you and your business. Getting your business books organized and in order is an achievable goal. While you might be thinking it’s a large project that will take a lot of time, you will be glad you did so. Not only will organizing your business accounting save you time, but also money. Though it might sound daunting, we recommend getting the organization process started as soon as you can!
Here are some helpful tips from our expert bookkeepers to get your business books organized now and keep them that way going forward.
1. Separate Your Personal and Business Finances
Believe it or not, most small business owners intertwine their personal and business bank accounts, especially when they are first starting out. We get it, it can be difficult to get the two separated. It’s important you learn to understand the benefit of keeping your personal finances separate from your business finances. Keeping the two together is a recipe for disaster.
How are you supposed to create a clear picture of your business accounting when it is mixed with your personal? Getting the two organized will save you time when you’re going through your bank records trying to establish your expenses during tax season. In the case you decide to sell your business, this will also make it easier to provide protection. Opening a business account is affordable and easy to do these days. You’ll be glad you did so.
2. Avoid Paying Expenses or Bills in Cash
The more you understand your business accounting, the better you will become at managing it. Did you know it’s beneficial to not use cash for your business? It becomes difficult, and sometimes impossible, to track money going in and out of your business when cash is used. No one wants to deal with a handful of receipts! This can be avoided by sticking with a debit or credit card for your business account.
In the case you do need to use cash for your company, we recommend reimbursing the payer immediately to make sure there is a record of the transaction. This can be done using an expense form. You can also create a cash flow statement. Find what works best for you and your business and take the time to capture all cash spend of your business. It will be worth it.
3. Create Separate Records for Accounts Payable and Receivable
Accounts Receivable helps you track the money coming into your business, while Accounts Payable keeps track of the money going out. Creating an Accounts Receivable account and keeping them separate will help you keep track of whether your customers have paid. This will also give you an idea of what accounts are unpaid. You will then be able to keep your cash flow smooth throughout the entire month.
There is also a benefit to having an Accounts Payable account. By being aware of the money your business is spending, you will ensure you are not paying bills twice or being late on your supplier payments.
4. Organize Your Paperwork Digitally
There are many options when it comes to choosing an accounting software for your business. Do some research and see what works best for your strategy. You will be happy to know you no longer have to manually file or store your receipts, invoices, or other financial paperwork involved with your business. We are thankful for all the software available in today’s world!
Keeping track of your books digitally really is the way to go. You will be able to back up your files electronically and securely. No more storing them physically within your business, which will save you space at the office. This will also reduce the risk of important business information getting lost. Next time you are wanting to access your business documents, you’ll easily be able to do so thanks to your accounting software.
The more you know about your business and the financial aspect, the more informed your decisions going forward will be. We recommend making an effort to regularly monitor your accounting transactions and statements. If you have any questions about the information above or would like to talk with one of our professional bookkeepers, give us a call at 503-405-9466. We are happy to help get your books organized and make your business bookkeeping a lot easier.