A business, small or large, needs a maintained record of money that is flowing in and flowing out. You may have seen companies either maintaining spreadsheets of transactions and statements or outsourcing accounting and bookkeeping.
Today, a wide variety of software is also available to make bookkeeping handy for companies. Huge businesses always have the liberty to use this software or to outsource bookkeeping strategies.
However, for smaller businesses, the process of bookkeeping can sometimes be daunting and overwhelming because of the lack of infrastructure and bandwidth. In such a case, it is always easier to learn very basic and simple accounting strategies that can help small companies keep track of their money and manage taxes. Entrepreneurs have to wear many hats and it’s important and crucial to making accounting one of them.
Bookkeeping not only ensures easy flow of taxes but also helps you estimate your revenues and expenses better. For growth in any business, it is mandatory to first manage the accounting accurately.
Here is a list of simple bookkeeping strategies:
1. Hire a Freelancer Bookkeeper or Part Timer
Since small business wouldn’t have the budget to hire a full-time professional, they can at least hire someone part-time or a freelancer. An experienced accountant can make things a lot easier and entrepreneurs in small businesses can learn the techniques from them for further benefit.
2. Keep a Billing and Invoicing Software or Template Handy
Don’t let your clients get away without giving you proper receipts. You also make sure that you give them invoices and bills for every business transaction. Don’t consider anything a small number when it comes to bills. In business, even a penny can make a huge difference. Today software and templates are available online for making this easier for you.
3. Use Spreadsheets and Folders on a Daily Basis and Keep Updating Them
When one can’t use advance bookkeeping software, spreadsheets and folders are the best way to manage all transactions. Different colored folders can be used, for example, for money received, make a blue folder, for money paid, make a red folder etc. In a spreadsheet, everyday entries can be made underpaid, received, purchase, salaries, expenses etc.
4. Review Your Accounts and Balances Monthly
After a daily update, weekly or monthly reviews are important. Pay close attention to the balance sheet, salary slips and cash flow by the end of the month and review it. Spending time on your accounts and finances will only going to benefit you so dedicate at least 2-3 hours every day and half a day every month-end.
5. Keep Financial Documents and Receipts Safe for Future Use
Nobody enjoys paperwork but in the absence of an expert professional or an advanced software, it is really important to keep all documents, cheques, bank statements, receipts etc. handy, after all these are the proof of cash that flowed in and flowed out. You can dedicate one whole cupboard or more for stocking these crucial papers. Papers are important for audits too.
6. Provide Essential Tax Forms
Tax forms are really essential if you have employees, freelancers or contractors working with you. Every state has its own tax obligations. Small businesses should make sure to follow them diligently. Avoid any penalties and interest. Save money where you can. File taxes carefully.
7. Calculate and Predict Minimum Monthly Benefit
Always analyze your numbers. Once you analyze your numbers, you can predict revenues and profit for each month. This will also give you a sense of how to improve those numbers. Growth comes when finances are properly managed, organized and then analyzed.
Immense Benefits of These Simple Bookkeeping Tips
Aforementioned, simple tips and strategies of bookkeeping are essential for not just financial stability in business but also for its growth. A bookkeeper doesn’t have to be an expert to help business reach heights. Just by following such simple tactics, one can solve bigger problems in small businesses. Accurate financial bills and data in place help to make better decisions and business predictions.