Small Business Bookkeeping Tips You Can’t Afford to Ignore

Most small business owners prefer to do bookkeeping on their own. But DIY bookkeeping is often easier said than done. Not all business owners are professional bookkeepers, but somehow they manage and power through it by following bookkeeping tips for small businesses. It might seem to go easy in the beginning, but you will realize the consequences only when you face errors looming at the time of reconciliations and financial closings.

If you are a small business owner and a DIY bookkeeper lately missing dinners, late nights and good sleep, this article is right for you. There are some bits of bookkeeping basics and small business bookkeeping tips for DIY bookkeepers to get the ball running.

Why Bookkeeping is Significant

Accounting is a serious part of any business. All your accounting greatly relies upon your books.  If the books are not accurate, it directly affects the credibility of your records. And every reconciliation part will be a nightmare. Inaccurate records may pull up big scoops of tax penalties. You need to maintain tight records to get your accounts cleared. 

Most small business DIY bookkeepers will be using accounting software like QuickBooks and Xero to keep tabs on their accounting. However, these software tools work with the numbers you feed in them. If your books are not organized, you cannot expect the automation tool to do accounting without friction. To avoid these frictions and tax penalties, clean and organized books are the only way. So, to keep forward and to improve margins, you must take bookkeeping seriously and work on improving it by following bookkeeping tips for small business.

Golden Rule of Bookkeeping

Most bookkeeping professionals advise more on how to manage the business part, than the bookkeeping part. Because bookkeeping does not just deal with a tray full of receipts, invoices and bank statements. Bookkeeping is more than just data keying. You will have to keep tabs on all transactions that happen in your business, your business cash flows and then perform reconciliation. The bank reconciliation is how you will know that all your records are genuine and accurate.

The golden rule of bookkeeping is you have to make sure that every business transaction and no personal transaction must flow through your business card.  It is all about streamlining all your business transactions through one business bank or credit card, without tangling your personal expenses in it. This practice ensures de-cluttered books and no tension for the bank reconciliation.

Bookkeeping Tips for Small Business

Below are five proven small business bookkeeping tips to help keep your books on sound footing. 

Tip #1 – Get things done easier with automation

The word automation has been rattling the whole world for the last decade. It has its footprints in almost every industry. Some years back, automation was only reserved for big enterprises. But today, half of the small businesses have automated workflows from customer management, marketing to collaboration tools to use within teams. In such a scenario, you can automate your bookkeeping, so that your numbers flow intact into your accounting software. 

Manual bookkeeping is however prone to errors, and also eats up a lot of time and energy.  But automation tools can keep tabs on your books and maintain the records with unrivaled accuracy and speed. If you are using QuickBooks for your small business accounting, you must have a look at PayTraQer, an intuitive automation tool that can sync your online transactions into QuickBooks automatically.

Tips #2 – Follow up on accounts payables and receivables

Whatever done or undone, you must always stay on top of your payables and receivables and take required actions accordingly. You will get a better overview of your business finances and the near future cash flow status of your business. With this analysis at hand, you can foresee your cash flow and correct any trends before they glide out of your hand.  It will give you an understanding of how to do bookkeeping for small businesses.

Let us understand the basic difference between accounts payable and accounts receivable now

Payables - Accounts Payable is also a type of short-term debt. It is the money you owe to the vendors or suppliers who keep your small business running. Delinquent payables can affect your credit rating and restrict your access to bank loans and credit from suppliers. So, prioritize paying off your APs as soon as you can to produce an accurate balance sheet and keep your credit score up.

Receivables - Sending an invoice to a customer does not mean that you will be paid right away. There are some late-paying customers who need a constant nudge to respond to your invoice. If they can’t pay your invoice on the whole at a time, you can even get partial payment at regular intervals. 

Keeping tabs on accounts receivables and invoices is equally important as payables. It helps you get an idea about how much cash is likely to roll into your account. With this information at hand, you can plan your finances and even the payable process accordingly. Tip #3 - Give your books a weekly review

Tip #3 - Keep your business and personal expenses separate

Mingling your personal expenses with that of business is the most common mistake every small business owner makes. This might seem trivial in the beginning, but it will pull up huge headaches during reconciliations and tax filing. Whether you have a start-up or you are a freelancer, getting a business card as soon as you plan out for setting up a business is small business 101. This will also help you with credit lines. You can consider it as one of the effective small business bookkeeping tips as well.

Most small business owners usually have a business card. The mess arises when you start using your personal card for business expenses, assuming to compensate later. The same happens vice versa at times. That is not the way it should work. Always carry both your business and personal cards wherever you go and never interchange the expenses. Separate expenses make your bookkeeping task way easier and with de-cluttered books, you will not have to over-exert on the reconciliation part. 

Tip #4 - Do weekly and quarterly reviews

No matter if you are a DIY bookkeeper, or you have an automation tool for bookkeeping, or you may even have a bookkeeper, you must always invest some time reviewing the numbers. This greatly helps you to know what is actually going on with your money. And weekly reports can always keep you on track, even when things are getting messy. With weekly reports, you will know the status of your cash flow almost immediately and so you can plan accordingly. Reports and reviews at regular intervals keep you organized and informed about the accounts payable and receivable.

Tip #5 - Avoid Cash

Cash is the easiest mode of payment, especially in the store-fronts. But the time is changing, people now prefer paying online and are more comfortable with the POS. On the other hand, online transactions make your bookkeeping easier. You need not chase your receipts and invoices. With online payments, you will know the exact amount and even the place and time of payment. With these, there are no chances of losing records of purchase. 

Bottom Line

No matter if you have an e-commerce store or a brick and mortar store, keeping your financial records straight simply makes sense. Though you don’t do the bookkeeping yourself, follow these small business bookkeeping tips to have de-cluttered books and on the dot tax filing. And if you need to automate your bookkeeping, try using PayTraQer, an Intuit authorized automation tool that can sync all your online payments into QuickBooks, even while you are away. Give it a shot with our 30-day free trial, you will love it!