When you start out as a small business owner, you may not be the best at managing financial matters. However, this is definitely a requirement for a successful tenure as a business owner. Thankfully, you still have time to learn. Here are the top five small business bookkeeping tips for beginners to help you learn how to properly manage business finances.
Track All Your Expenses
Tracking business expenses is a requirement. There are no ways to get around this. Make sure you save receipts for all of your business expenses. Then, be sure to keep a running ledger of these expenditures as well. This includes things like business meetings held over lunch, dinner or drinks too. Make a note in your calendar of who you are meeting with. This will be helpful in case you get audited. Tracking business expenses is the most fundamental small business bookkeeping task you will be responsible for.
You should also track deposits made to your business accounts. You may have cash infusions from loans, sales, certificates of deposits or other venues. (Find out what is a certificate of deposit if you do not already know). These are the deposits that can be easy to lose track of or forget to account for. Make sure you record all of your loans, sales and other business deposits in a ledger. This will help you to prepare for tax season and is a must for properly managing your bookkeeping tasks.
Managing small business finances is impossible if you do not plan ahead. Make sure you account for future expenses. Try to set aside a little bit of money each month. This way, that big expense can no longer be put off, you already have all the money for it ready to go. Otherwise, it may have a negative impact on your cash flow management.
Use Small Business Accounting Software
Accounting software, like Quickbooks or similar, will help simplify small business bookkeeping processes. It will also help to improve efficiency and decrease the amount of human error. No matter what type of software you use or whether you need it for for-profit or not for profit accounting, this is a business investment that is certainly worthwhile. Small business bookkeeping software will help make it easier for a beginner business owner like you to get the hang of financial management quicker. That will be much better for your bottom line and business health overall. Make sure you consider spending the money on this important business software.
Reconcile Books Monthly
At the end of each month, you should be reconciling your books with your bank statement. This process is called bank reconciliation. It is one of the fundamental tasks of bookkeeping. Each month, make sure to take time out to do this. Doing so will help you to fix any errors. It will also help to make sure that your bank is not charging you any unexpected fees. Reconciling your books with your business bank accounts is a fundamental part of small business bookkeeping that you would be wise to do.
If you have just started out as a small business owner, you may not be an experienced bookkeeper. That is okay. However, you have to learn in order to give your business the best chance at success. Make sure to learn the small business bookkeeping basics mentioned above. This is just the starting point to properly managing small business finances. Use these small business bookkeeping tips as the jumping off point to better manage cash flow and overall financial health for your company. This is certain to help you avoid the need for small cash loans later on down the line.
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