5 Bookkeeping Tips for Your Small Business

If you’re a contractor, consultant or small business owner, the idea of managing your expenses, accounts receivables and payroll may be an overwhelming task. Yet it’s crucial to the success of your business.  Accurate books ensure the validity of the financial data you’ll need for tax preparation, budgeting practices and cash flow analysis, to name a few.  

Here are five simple bookkeeping tips that will help you produce and preserve accurate financial data for your business: 

1. Accounting SoftwarePhoto by picjumbo.com from Pexels

Simple, user-friendly and robust accounting software has never been easier to access thanks to the internet. QuickBooks by Intuit is a very common software platform that is easy to integrate and ensures you have real-time information about your financial data.  Several price point and functionality options are available, whether you’re a single contributor or have multiple locations around the world. 

2. Partner with a CPA

Working with a CPA at the end of each month, quarter or, at minimum, once per year is a great practice to adopt early in your developmental stages.  Ensuring your business is in compliance with both state and federal laws can be a daunting task. A verified CPA can assist with certifying accurate financial data history, as well as aid you when it comes time to file your taxes. The cost for a certified CPA can vary in range, however the capital outlay is worth the peace of mind you will receive should you or your small business be audited by the IRS.

3. Keep Accurate Records

Many individual contributors or small businesses begin their new endeavor before setting up key practices for bookkeeping and data management.  It’s crucial to track your expenses and safely compile receipts and any documentation related to your business.  Using MS Excel or Google Sheets makes this easy to manage. Remember to separate your personal expenses from your business expenditures. Once you’re able, consider hiring a part-time bookkeeper or get familiar with a robust but cost-effective accounting software.

4. Monitor Cash Flow

The excitement of being your own boss and running the show comes with a new set of responsibilities.  Ensuring you can go the distance relies heavily on how you spend your cash and how you can plan for the future.  Review your expenditures each month as well as your income received.  Are you spending more than you are making?  Are you able to cut some of your expenses?  What monies are expected to come in to offset your expenses this week, next month, etc.?  Having a clear picture of your cash flow gives you leverage and can help you identify if changes need to be made to influence your bottom line.

5. Create a Budget

Ensuring you will have enough capital to keep your business running requires consistency and dedication.  Creating a budget and tracking your progress on a regular basis could mean the difference between the success or failure of your business.  Flexibility is paramount as your needs are likely to change as your business grows.  

Implementing these bookkeeping tips and following detailed practices across your business will give you confidence, forward-looking data on your business’ financial landscape and allow you to make sound business decisions in the short and long term.