Bookkeeping Best Practices for Small Businesses
Bookkeeping is an essential part of running a business, but it can often become complicated and overwhelming. Is there anything you can do to make the process easier? Absolutely. Do not wait until the last minute to think about financial management—here are a few best practices you should keep in mind at all times to make bookkeeping flow smoothly.
Paperwork is messy. Paperwork is wasteful. Instead of attempting to manage an abundance of it (paper is easily lost, too), move everything online or to a digital platform. When all of your relevant data is virtual—such as employee hours, tax information, payment records, expenses, etc.—you can access all of it in one place, and it’s much less likely you will lose anything. Some platforms even enable you to automate certain processes, so instead of managing everything manually, let technology do some of the work for you.
Establish a routine
Don’t close your eyes at the end of each month and leave loose ends. Make a habit of closing your books on a monthly basis. Not only will you have peace of mind knowing where your finances stand—even if it’s not ideal—you will be able to better assess how your business performed over a given time period and what you can do to improve.
Anticipate your taxes
Figuring out your taxes can be a frightening endeavor, but planning ahead of time will save you some anxiety and help you be prepared when April comes around. You already have a budget for all of your other expenses (or at least, you should), so set aside an expected amount of money each month dedicated to taxes, and familiarize yourself with deductions you are certain you can claim.
Keep your personal expenses separate
If you are an entrepreneur whose business seems inextricably tangled from your personal life, do what you need to separate the two. You’ll save yourself a significant amount of trouble (for yourself and for your accountant) when you have a credit card and checking account specifically for your business. Your business might play a sizable role in your life, but its finances should not be synonymous with your life outside of it.
Bookkeeping does not have to be a hassle if you approach it in a proactive and detail-oriented manner. External services like Catalyst Services can also provide you with expertise and tools useful for optimizing your accounting. What bookkeeping best practices will you make a point to follow this month?
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