Category: Accounting

Keeping track of sales, earnings, expenses, and purchases is fundamental to the overall health and sustainability of your business. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals.

But despite their proven importance, many business owners dread and avoid accounting tasks. In fact, 40% of surveyed entrepreneurs claim that bookkeeping is one the worst parts of running a business!

Wondering if it’s really worth the aggravation?

Here are four reminders of how effective bookkeeping is the cornerstone of small business success.

Keeping track of reimbursable expenses

A reliable system for tracking reimbursable expenses ensures you reap all the benefits you’re entitled to when filing your taxes. Expenditures sorted into categories, such as “food”, “travel”, and “office supplies,” can be catalogued quite simply with online bookkeeping software.

Using a dedicated credit card for business expenses, and updating your records on a monthly basis, will put money back in your pocket come tax time.

Measuring profitability and planning for the future

In order to grow your business, you must be able to track and compare its finances from one year to the next.

In addition to reconciling the books and bank statements every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:

• measure year over year profits;
• identify opportunities to cut costs;
• plan for major expenses (such as new office space, equipment, or staff); and
• develop data-based strategies for expansion.

Preparing for tax season

Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation can lead to serious penalties, fines, and even an audit.

In the United States alone, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings!

Save money and get peace of mind with sound bookkeeping. You’ll be assured of compliance with regulations, and will receive a reliable estimate of amounts owing long before your tax bill is due.

Final tip: ask for help

Most entrepreneurs are passionate about developing new business ideas – not crunching numbers. Employing a professional bookkeeper, even on a part-time or as-needed basis, can help optimize your accounting and increase overall profitability.

There’s a good reason 71% of small businesses outsource at least one accounting function to help manage tasks like payroll, closing the books each month, and managing accounts receivable.

It’s well worth it. Invest in effective bookkeeping and you’ll build a solid foundation for a resilient, forward-moving small business.

Everyone likes making money, especially small business owners. Invoicing, however, is typically one of the tasks that small business owners like the least. Chores like creating and sending invoices get set aside for other duties that are seen as more enjoyable or even more urgent.

You tell yourself you’ll get around to it tomorrow, but tomorrow becomes next week, next week becomes next month, and suddenly you realise your client hasn’t paid you in a while and your bank account is lower than expected.

The issue, of course, is that clients can’t pay you until you’ve invoiced them. You need an invoicing system that makes the process less painful—or even takes it out of your hands entirely.

Hire a bookkeeper

Bookkeepers handle your company’s day-to-day financial transactions and records. That includes invoicing and following up when invoices aren’t paid.

A bookkeeper creates the invoices and ensures they’re sent out on time. They record all payments that come in and follow up on unpaid invoices. By having a full view of your company’s financials, they’ll even be able to tell you if you’re charging enough for your services.

Think about how much easier it would be to get paid if someone else was responsible for ensuring that happened.

Use invoicing programs

Cloud-based invoicing programs make creating, sending, and collecting on invoices much easier. You set up an invoice template and for each client or project fill in the necessary information. The invoice is sent out, either as an attachment or as a link to the invoice online.

With some systems you can see when the invoice was sent and when the client viewed it. You can set up different deadlines for each client and you can often accept payment through the system. Not only will invoicing itself be faster, but it’ll be easier for clients to pay you.

Make sure your invoices are going to the right person – sending invoices to the wrong department can create massive delays in getting paid. A cloud-based system can also keep track of when your invoices are overdue and send out reminders without you thinking about it.

Set up a payment schedule

If you have regular clients who require the same amount of work from you over a set time—such as a month or two months – set up a regular payment schedule with them.

This is easier if done along with a cloud-based system, which can automatically be set up to send out recurring invoices. You set up how frequently the invoices go out and your client gets used to expecting those invoices and paying them quickly.

Final thoughts

The only way for your business to bring in money is to invoice your clients. Unfortunately, invoicing is one of those boring tasks that constantly gets put off.

Finding ways to make that process easier for you and your clients means you’ll be paid more quickly. Isn’t that every business owner’s dream?