3 Important Bookkeeping Tips for Business Owners
As a business owner, bookkeeping may not be your greatest strength. It can be tricky maintaining accurate financial records and if you're doing it on your own, you're likely drowning in spreadsheets.
Maybe you have a bookkeeper to help you or maybe you're trying your very best but it's not going as smoothly as you had hoped, either way, we're here to share a few tips that will make it easier and save you a few of those hard earned dollars. A shareable infographic can be found at the bottom of this post.
1. Budget and Plan for the Unexpected
Budgeting can be tough, especially if you're just starting your own business but if you can plan to set some money aside it will prepare you for any unexpected surprises. It might be a great networking event you want to attend, take part in a tradeshow or perhaps invest in some modern software, regardless of your reason if you don't have the funds for it you might miss out on an excellent opportunity.
This also applies to busy and slow times of the year, you don't want to feel pressured or overwhelmed trying to get a loan in the middle of your slower season, try to think of these scenarios in advance and then create your plan.
Plus, it's good to have a few dollars saved for fees. At times, your office utilities bill might be higher than usual, or if you accidentally missed your tax deadline, fees can be costly. However, if you've tried to prepare for these situations you'll find yourself less stressed and you won't be scrambling through your couch cushions for coins.
2. Track Your Finances and Keep Business and Personal Separate
Keep a close eye on your income and expenses to see how well your business is doing. Whether it's good or bad, you should be fully aware of your financial situation. It's an instant way to see if your profitable, areas you could be saving more or improving. We suggest using simple software to help make this super easy (see our awesome software suggestion at the end of this article). Although we hear many business owners start with spreadsheets, they get out of control, aren't constantly updated and aren't shared with other company members which causes chaos and doesn't accurately reflect your business financials.
One good habit to get used to is separating your business expenses from your personal expenses. Start by making a card specific for business purposes because typically your bank statement will categorize expenses. You can take it a step further by adding it into your software or whatever program you're using to choose very specific categories. If you're looking at solution options, look for features that will help you and your business progress. Here is a great way to value software if this is your first time buying or you made the mistake of purchasing the cheapest one available.
If you do have to use cash, for example for a meal, make sure you write it in your electronic notebook or planner so you can add them later ensuring you don't miss out on tax write-offs.
3. Use Reports to Improve your Business Strategy
If you've been receiving reports or have a system that generates reports, preferably daily or weekly, you should be reviewing that data in order to make educated decisions moving forward. This is a crucial tool that many business owners overlook. Reports provide real-time insight into your business, how well you're doing and where you could improve. Take a bit of time to utilize this information and you'll have the ability to make instant changes and adapt to the market based on facts and data. You might be surprised by how a few minor changes can have major effects on your success.
Remember you're a business owner whose number one priority is to focus on your business. If you're having trouble keeping on top of your financial records or you're finding it's taking too much of your time, check out Toki.