Best and Effective Bookkeeping Strategies and Practices for Small Business Owners

What is Bookkeeping, and why you should concern yourself with it?

When you are running a business, big or small, one of the most important for you to keep track of is your company’s financial transactions; naturally, this may seem like a strenuous task, but keeping a record of one’s company transactions may either make or break one’s business, this strenuous recording of a company’s financial transactions is generally termed as bookkeeping. Bookkeeping is vital for any business’s success as it makes it easier for one to analyse their budget, where they are leaking funds, and which segments of their business are actually turning out a profit. By being informed about their company’s financial situation, one can create a roadmap for the company’s success, and without bookkeeping, this task becomes that much harder.

Now, if you are a small business owner and are new to bookkeeping, then here are some tips that will be helpful to you.

1. Don’t mix business with personal.

This is a very common mistake made by many small business owners and has resulted in disastrous results for their companies in the long run. It is of vital importance that one never mix their business transaction with their personal one; if you are travelling to another city for a business meeting, then the expense of that trip has to covered by the company; similarly, you can’t go to a family outing on the company’s dime.

2. Pay yourself

If you are a small business owner, one of the first things you should do after setting up your business is to start paying yourself a salary. This, in turn, will prevent you from breaking the golden rule of any business, having your business pay for your personal transactions. By paying yourself a salary, first of all, you are earning a certain amount of money that you can use for personal transactions, but the second and the more important thing you do is clearly establishing a separate business entity.

3. Keep all receipts

Yes, it may seem trivial, but having your original receipts at the time of audit may come in handy, and that’s not all; if you are eligible for tax deductions, you need to have the original receipts at hand to be able to make the most out of it.

4. Implement IT

The internet is filled with a plethora of options for various types of IT software for one to implement for their business usage, and you should make use of them as it will make your bookkeeping task a lot easier. For small business owners, Go Cloud with Xero is one of the best IT software in the market.

5. Make a schedule

Naturally, you can’t do every bookkeeping task daily as it may consume a lot of your time, time which you should invest in your business; you can’t spend a couple of hours daily for bookkeeping. To sort this out, you can create a schedule to do various integral bookkeeping tasks and set a frequency for them that suits you and your business the best.

6. Track your finances

The main benefit of bookkeeping is that it enables one to track the company’s finances, as these financial analyses will help you create a roadmap for the company’s success.

7. Have a consultant on retainer

As a small business, you wouldn’t want to hire a full-time accountant because, let’s be honest, they are quite expensive. But one way you can get around this issue is by hiring a consultant who can check your company’s financial health regularly. By hiring a skilled consultant on an hourly basis, you can easily save yourself quite a lot of money.

8. Outsource

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