One of the things that new business owners should know is how to have a proper bookkeeping system. Bookkeeping pertains to the recording and tracking of all financial transactions performed by your business regularly. It’s requiring lot of work and can be a tedious task, especially for small businesses and start-ups who don’t have enough resources for the job.
However, there are many benefits of having an organized bookkeeping system. With well-managed bookkeeping, you can easily get the data and information you need to make swift decisions on business operations. You can create forecasts of financial gaps to fill and even see where you can cut down on costs to help you maximize your profits.
More than that, it provides reliable insights to help measure the performance of your business. This can guide you in making informed strategic decisions and sets a benchmark for your revenue and profits. Many more benefits come with proper bookkeeping, and knowing the best ways to do it can save your business during tough times.
Here are some advantages and tips you can do to have a well-managed bookkeeping for your business.
Advantages of a Well-Managed Bookkeeping
Keeping track of your business’ cashflows can be a tiresome task. However, this can do you leaps and bounds. With an organized bookkeeping system, you can easily see how your business is doing regarding its financial performance. A good bookkeeping system gives you accurate details to help your business grow.
On top of that, you won’t have to worry about missing payment deadlines, such as taxes, accounts payable, loans, and the like. With this, you’ll be helping your small enterprise manage business debt and prevent it from going under.
- Helps in setting an accurate budget
Not only does a well-managed bookkeeping system can organize your finances, but it can also guide you when setting up a budget. One of the things you’ll have to look out for your business is the expenses. Proper bookkeeping lets you balance your business’ costs and the financial resources available efficiently.
For example, taking out an SME recovery loan can be pretty daunting. But with accurate bookkeeping, you can budget how much you’ll have to cut down on other costs to accommodate your loan payments.
- Speeds up the financial analysis process
Bookkeeping allows you to pull up the necessary data for an accurate financial report. You won’t have to sift through hundreds of receipts or statements of accounts to gather the needed figures. Instead, you’ll be cutting down the time you spend analyzing your accounts and creating financial statements with the information you need already in one organized place.
- Provides a basis for business goals
As for every owner or business leader, the goal is to expand and accelerate the growth of your business. However, it’s also essential to set realistic goals your business can achieve. This doesn’t mean keeping your goals at a down low. It just means that there should be a basis for those goals.
In this case, properly managing your bookkeeping lets you set a realistic roadmap for your business. It provides concrete goals that your business can attain without sacrificing its financial resources.
6 Tips to Improve Business Bookkeeping
1. Dedicate a bank account for your business
It’s not uncommon for small businesses to use their personal money to fund their start-up. However, it becomes a headache when you mix your personal funds with your business income. Having a separate bank account for your business saves you the extra work from figuring out a personal transaction from a business one. This can even build up a credit rating for your business.
With that, make sure to open up a separate business account when you go through with your start-up.
2. Pay off any personal funds used
Apart from having a separate business account, remember to pay off any personal money you used to fund anything relating to your business, such as inventory, permits, utility bills and the like. In this way, you’ll be able to separate your money from the business and have an accurate view of your expenses and income.
3. Consider migrating to cloud storage
Using cloud storage is another way to cut down the effort and time to do your bookkeeping. Instead of writing it down in a book that can get destroyed or lost, use a bookkeeping tool to keep track of all transactions your business makes. This lets you have a full view of your business, and you can easily pull up your data anytime, anywhere from the cloud.
4. Check-up on your receivables
If your business offers a payment scheme where customers can pay later, you have to be attentive and follow up about the receivables. When you’ve already received the payment, make sure to update your bookkeeping immediately, so you won’t double count it and have a hard time reconciling the figures.
5. Keep your books up-to-date
Apart from the receivables, you’ll also have to take note of all your business’ cash flows. Whether it’s an expense or an income, update your books regularly. This helps organize your finances and lets you see where your business’s money is spent.
6. Save your receipts
To help you keep your books up-to-date, make sure to save your receipts. You can either have them photocopied or scanned and saved in your cloud storage. In this way, you can have a reference to look back on when updating your books. Doing this provides you with detailed information on your business expenses.
Manage Your Business Finances Effectively
Although many benefits come with properly-managed bookkeeping, for small business and start-up owners, doing so can be a tiresome task. However, knowing the tips and tricks on properly doing it can save you time and effort, which you can pour instead on improving your business’s focus.
With all this, remember to update your books regularly with the right set of tools. Whether it’s daily, weekly, monthly, or yearly— the timing is all up to you.