Whether you are an established business owner or just starting on your entrepreneurial path, bookkeeping is a necessary part of your professional journey. Here are some strategies to help you with financial organization and bookkeeping.
Set Up Automatic Billing and Payments Where You Can
The money that comes in and out of your business needs help getting to its destination, but that doesn’t mean you have to do everything yourself. Take advantage of – or even set up systems for – automatic billing and payments.
The crux here is making sure you still monitor these systems on a less frequent, but still consistent, basis. So long as you know which expenses are coming out of which business accounts and you know you have enough funds to cover them, automatic transactions relieve some of your stress and give you peace of mind knowing your essentials are taken care of.
Break Up the Work
Procrastination is the spice of life. It’s easy to tell yourself “I’ll do a little bit every day” when you are planning out your next week or month, but the execution doesn’t always work out that way.
Set up a time in your day (preferably) or week to go through your transactions, enter the necessary data, and gather or organize documents. We all know how it feels to put something off for just a little too long and then be staring down the barrel of a mountain made of paperwork.
Keep Your Files Organized
While having one perfect system for keeping all finances and other business-related records would be ideal, the reality is much more nuanced. Your business may have a storefront that accepts a variety of payments like cash, checks, credit, and debit. And perhaps your online store runs through Paypal or Square. That’s a lot to keep track of.
It’s important to develop a strategy early in the year to ensure that your records – whether paper, pdf, or something in between – are organized and easily referenced. Issues will arise, and it’s better to have things in order before that happens.
Use Separate Bank Accounts
The easiest financial mistake many small business owners, independent contractors, and freelancers make is not separating their personal finances from their business ones.
According to Enkel, “when you comingle finances, you risk generating tax and liability issues for both you and your business.”
Keeping those bank accounts separate can help you improve financial forecasting, business planning, and budgeting, while also allowing for accurate tax deductions for shared expenses (think cell phones, vehicles, and other technology or equipment).
Keep Yourself Informed
Many of the tips here include delegating or automating financial processes to save you time and money. But that doesn’t mean you should just assume the best. The best practice for most businesses is to review your financials at the close of every month. If you want to be extra thorough, review your records with an accountant or other finance professional who is intimately knowledgeable about your business’s income and expenses.
Make Time for the Future
When you have a good strategy for keeping your books organized and up-to-date, it’s much easier to devote quality time to focus on where you want your business to go in the future. And tight record-keeping means you can accurately forecast a whole host of scenarios based on projections of your business’s growth and change in the short and long term.
Hire a Trusted Professional
Like your taxes, bookkeeping has to be done, and it goes a lot smoother when you’re organized and you have knowledgeable professionals available to help. While wearing multiple hats is part of the independent contractor or small business owner experience, there is such a thing as too much. The best business leaders know how to delegate.
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