As a new or small business, learning how to successfully manage your books can be an intimidating task, especially coupled with trying to navigate the world of self-employments and the other stresses that go along with that.
Now, you probably didn’t start your small business, or decide to go self-employed because you couldn’t wait to be pouring over spreadsheets and recording your expenses night after night. You want to be working on your business, honing your craft, and growing your customer base. In time, you may decide that hiring an accountant to organise your accounts int the most efficient way possible, leaving you more time to work on the business, but, in the meantime, we’ve shared a few tips for getting it right.
First off, let’s take a look at what bookkeeping is. Simple put, bookkeeping is the action of recording financial transactions. It is one the fundamental tasks of accounting for your small business but can be a challenging aspect to stay on top of.
So, why does your small business need bookkeeping? Well for starters, an organised set of books is a great start for running a successful business long term. But, on top of that:
It allows you to check whether you are working in the green or the red
It gives you reliable information when planning and budgeting
You can be on top of missed payments from consumers, and will be more likely to notice incorrect payments
You’ll be able to accurately complete tax returns
Having up to date information, that is clear and well organised makes things easier if you ever need to work with external parties like lenders, or investors
So, that is why you should be conducting bookkeeping for your small business, but let’s look at two of the most important tasks you need to get on top of in order to conduct this:
Make sure you record every transaction
It might sound time consuming, but it is important that you record your sales. There are a few ways you can do this, either by writing in a cashbook, using a spreadsheet, or making use of an invoicing software.
Reconcile every transaction
Reconciliation is the task of regularly cross-referencing your cashbook with your bank statements to ensure the balances match up, and if needs be identifying reasons why they don’t. Decided on a time scale for your reconciliation, whether that be daily, weekly, or monthly and then be consistent.
If you find that you are too busy to do bookkeeping for your small business, or you are worried about mistakes or not fulling understanding the process then it might be time to pass the task to an accounting firm. Get in touch with the team at Instant Insight to see how their service could support you.