Book keeping tips for small business owners What is book keeping anyway?If you’re a small business owner, chances are you’ve heard of bookkeeping. It can seem like another one of those things entrepreneurs have to deal with but don’t really know what it is. To put it simply, bookkeeping is the process of recording, storing and retrieving financial information related to your small business. Your books include all of the documents that make up your financial history: receipts, invoices and statements from suppliers, bank statements and more. If you’ve been operating for a while you may be wondering why bother? Is it even worth my time?Bookkeeping is important because accurate record-keeping ensures your business complies with tax laws and meets its legal requirements. You need good records to prepare your financial statements so that you can analyse your business performance, keep track of how much money is going out versus coming in, get a handle on cash flow, identify the strengths and weaknesses in your operations — the list goes on. If you don’t have all the details about how much money you owe or who owes you money – bookkeeping will help you get this straightened out quickly. Beyond these benefits there’s also an emotional side to being organized; no more worry when CRA calls or when an auditor shows up at your door!Hiring an accountant or bookkeeper.If you are not a numbers person and the idea of trying to manage all of this on your own is giving you serious anxiety, hiring an accountant or bookkeeper might be an excellent choice for you. This can save you significant amounts of time, money and stress over your business’s lifetime.A great way to get recommendations for accountants or bookkeepers is by asking other business owners in your industry who they work with.Find trust worthy accounting software.To get started, you should use accounting software that can integrate with your other business tools. Look for an option that integrates with your email and CRM tools, so you never have to waste time importing data from one source to another. You should also find a system that supports multiple currencies.Once you’ve found the best software for your needs, you’ll need to add all of your transactions. Automate as many entries as possible using bank feeds or importing data files. After everything’s added, run reports to check for errors and make adjustments where necessary.What records should I keep on hand?There are many records that you should keep on hand. From receipts to income and expenses, there is a lot of information that needs to be recorded and organised. You need to ensure that you have the following documents:Every receipt for purchases made by your business should be kept in a filing system so you can produce them when required. You need to keep them for at least five years in case they are needed by the tax office.It is advisable to keep copies of all invoices sent out as well as paid bills from suppliers, including any cancelled cheques.Keep a log of all business related transactions (including cash sales) so if you ever need visit the tax office for an audit, you can provide a list of sales made during a specific period of time and this will help with calculating how much GST has been collected from customers and paid over to the ATO.Take stock of your money chores.When you are a small business owner, keeping your financial house in order should be one of your top priorities. As the saying goes, “failing to plan is planning to fail.”The first step to setting yourself up for success is taking stock of what you are currently doing with money. This process begins by asking yourself some key questions: Where does my money come from? How much do I earn each month? Where does my money go? How much do I save each month? How much do I spend each month on bills and other expenses like food, clothing and entertainment? How much do I owe, both in loans and credit cards payments?It may sound simple enough but getting it all down on paper is easier said than done. For many people, just thinking about how they spend their money can be overwhelming – especially when trying to keep track of everything manually through pen and paper or a spreadsheet. Thankfully there are several tools available that can help make the process as easy as possible including online calculators, spreadsheets templates and mobile apps.Establish a time limit.To keep track of your business’s finances and make sure that you get everything done, it’s important to set aside time to work on tasks like bookkeeping. This time should depend on the size of your business—for a small business owner, it may mean setting aside an hour or two a week for activities like reconciling your accounts, creating invoices and paying bills.If you’re wondering when the best time is for you to set aside for bookkeeping, consider your personality type and habits. For example, are you an early bird or a night owl? Do you prefer to focus on one task at a time or do you love multitasking? Based on these factors, decide whether it makes more sense to do bookkeeping in the morning or in the evening—it really doesn’t matter as long as it gets done!It’s also important to figure out what types of documents and records need to be kept. In general, receipts that can be tied directly to a specific expense (and are less than $75) don’t need to be saved – they can simply be thrown out after being recorded. However, social security numbers should never be thrown away; instead shred them so that they don’t get into the wrong hands!Book keeping is what builds a small businessBookkeeping is an important foundation for any small business. It’s the process of recording all the financial transactions in your business, and it will help you get a firm grasp on where your money is coming from and where it’s going, which will allow you to grow and scale your business properly.There are several different types of bookkeeping methods that use different formats, but the two main types are single-entry bookkeeping (with just one entry per transaction) and double-entry bookkeeping (with multiple entries per transaction). If you’re running a small operation with no employees, then single-entry bookkeeping may be sufficient. However, if you’re running a larger operation or have multiple employees with access to your accounts, then double-entry bookkeeping is recommended because it provides more security and oversight.
24 Apr