Bookkeeping may not always be at the top of your to-do list, but it is an important task to create a solid foundation for your business’ finances.
Few people enjoy bookkeeping, and many business owners struggle with making time to keep on top of all their bookkeeping tasks. But companies of all sizes must stay organized with their books.
Bookkeeping creates a historical record of all the transactions that have taken place in your business.
When your bookkeeping is up to date, it is easier to understand what is happening in your business, making it easier to stay on top of other accounting and tax functions.
When you are up to date and organized with your bookkeeping function, you can:
- Provide updated financial statements for investors and other stakeholders
- Generate real-time reports to make informed business decisions
- Prepare taxes on time, and stay compliant with your tax obligations
It’s never too late to get your books in order. If you want to keep on top of your bookkeeping, here are eight tips to help you keep organized.
The best way to stay on top of your bookkeeping is to automate as many tasks as possible. Many small businesses use digital solutions such as cloud-based software to automate the various accounting tasks in their business. For example, good accounting software will save you time and money by automating invoicing, bill payments, and bank reconciliation tasks.
The best accounting software for your business should be secure, fit your budget, and be easy to use for you and your team. Be sure to research the available options or consult your accountant for accounting software recommendations that fit your needs. They can even help with setup and teach your in-house accounting team to use it.
One way to stay on top of your bookkeeping is to keep a running list of recurring transactions.
You might have transactions in your business, such as payments for rent, software subscriptions or other services, that occur every month or every quarter.
Some accounting software allows you to create recurring transactions right in the system, or you can keep a running list of transactions you expect monthly or quarterly. This cheat sheet can make bookkeeping tasks go faster and reduce the chance of any errors or missed transactions.
One common bookkeeping mistake is not recording cash transactions. Cash is usually difficult to track, and we often forget to take receipts or misplace them when we pay for goods or services in person.
If you use cash for business expenses, document it in your books as soon as possible. Keeping on top of the transactions will help you keep track of your costs when it comes time to do your taxes. If you are using cloud-based accounting software, you might even be able to keep track of these transactions on the go.
Keeping your personal and business finances separate to maintain accurate records is vital. When they are distinct, it simplifies the work for you and your accounting team.
One way to do this is to operate a separate bank account for your business and avoid mingling in personal transactions. As a result, you can easily track your expenses and income and maintain better records for tax purposes.
Think of your bookkeeping as a historical record of all the transactions in your business.
For every transaction, it is imperative to provide proof or backup. Whether it is an invoice, receipt or contract, part of your bookkeeping should keep track of this documentation.
Depending on the system you use, you might be able to attach proof in your bookkeeping software or have a separate process to ensure that the documentation is not lost. This way, you have all the receipts and documents ready for your tax accountant when tax time rolls around.
Reconciling your accounts regularly is another way to stay organized with your bookkeeping.
Whether you choose to do the bookkeeping, keep it in-house or outsource it to a bookkeeper, it is essential to understand the transactions.
Depending on the size of your business, as an owner, set aside time to:
- review transactions weekly
- review outstanding payables and receivables monthly
- ensure bank reconciliations are completed at least monthly
Reviewing your financial records regularly will help you catch mistakes and identify areas you can save money or improve business operations.
If your bookkeeping is up to date and accounts are reconciled, you can get live updates on your business’ finances. When your books are up to date, they can help you make relevant financial decisions in real-time.
Bookkeeping is a necessary function for businesses of all sizes. However, whether you enjoy bookkeeping or your least favourite chore, all business owners should consider if bookkeeping is the best use of their time.
By hiring someone to do it for you or outsourcing your bookkeeping, you can save time to focus on the parts of your business where your expertise is worth more.
If you’re feeling overwhelmed by the task of bookkeeping, don’t worry – there are ways to make it easier.
The best way to keep on top of your bookkeeping is to ensure that transactions are permanently recorded on time. Whether you do it yourself, with in-house help, or outsource it, bookkeeping is essential for businesses of all sizes.
Take the time to review your current practices and see where you can improve your processes and workflows.
Contact KSSP Partners LLP in Markham for your Accounting and Bookkeeping Needs
Talk to a professional bookkeeper to outsource your bookkeeping so that you can save time and focus on your business. At KSSP Partners LLP, our accountants and bookkeepers can provide services to outsource all your accounting needs. To learn more about how KSSP Partners LLP can provide you with the best accounting and bookkeeping expertise, contact us online or by telephone at 289-554-5997.