As a small business owner, it’s easy to fall into the trap of thinking that you are invincible and you can do it all. You handle your employees, manage inventory, create your marketing, answer inquiries, and generate sales. And while you’re trying to manage all those things by yourself, one of the most important jobs tends to get lost in the shuffle; and that would be your financial record keeping.
Here are 5 tips to help you get your financial record keeping in order and to keep it as painless as possible:
1) Establish business checking accounts. A business must be able to distinguish itself from its owners and one of the best ways is by establishing separate bank accounts. Not only is this important from an IRS standpoint when filing your taxes, but it makes tracking income and expenses much easier.
2) Schedule a time each week to review your records. Make it a practice to find time in your busy schedule to regularly sit down and go over your records. By taking time to routinely record your income and expenses and review your accounts payable and receivable, you will ensure that you’re on top of how your business is doing and you’ll be better able to manage your cash flow.
3) Purchase the right accounting software. Instead of trying to log your income and expenses manually in a spreadsheet, you might consider purchasing an accounting software program. If you are unsure what to buy, your accountant can help with that decision. The right package will allow you to access your records anywhere there is an internet connection and provide you with cloud-based backup and data storage.
4) Be sure your records are complete. Not only is it important to keep the amounts of each transaction, it is also necessary to sufficiently explain how and why each transaction took place. The IRS requires that businesses maintain records for up to seven years which is why clear, concise recording of financial transactions is crucial.
5) Invest in an experienced bookkeeper. As your business grows, you’ll likely find it more difficult to devote the time to record keeping. Even though it is one of the most important jobs, investing in a professional bookkeeper will allow you to direct your efforts toward what you are best at; and that is growing your business. Outsourcing your record keeping to an experienced bookkeeper will also provide you with the time to focus on another critical task—maintaining a healthy work/life balance. As a side benefit, it is also a business expense and is deductible.
Numbers by Victoria offers bookkeeping services and other financial options for individuals and small businesses. Since our services can be performed virtually, we’re able to work with people all over the United States. To contact Numbers By Victoria, or to learn more about our bookkeeping services, please visit: www.numbersbyvictoria.com.