10 Basic Bookkeeping Tips for Small Businesses

How well do you manage your company’s books? Here are some basic tips that will make your bookkeeping easier.

1. Keep Personal and Business Finances Separate
   This is pretty basic advice, but you might be surprised how often even seasoned business owners mess it up. Nothing catches an auditor’s attention like mixing business and personal finances. Even if you’re not audited, maintaining separate bank accounts makes reconciliation much more manageable.
   
   
2. File Expense Reports
   One way to accomplish #1 is to reimburse yourself for company expenses that you have paid personally. You should track expenses like your auto mileage, hotel stays for business or magazine subscriptions related to your business on an expense report. Then have your company pay you back. This way you get the money back into your personal account and your business gets an expense to write off.
   
   
3. Reconcile Accounts Monthly
   Reconcile your bank, credit card, and other financial statements promptly. Staying on top of your accounts allows you to catch errors quickly and makes reconciliation more manageable.
   
   
4. Don’t Miss Tax DeadlinesFriends forgive. Spouses forgive. The IRS doesn’t forgive. And they levy hefty penalties and interest. If you’re unsure about the IRS’s deadlines for 2023, you can find them here. Don’t forget to check with the tax authority in the state where your business is located for their tax deadlines.
   
   
5. Invoice Customers Immediately
   The sooner they see an invoice, the sooner they’ll pay (usually). Prompt payment helps your cash flow.
   
   
6. Watch Your Receivables
   Collections calls are always awkward, but waiting can get you into a cash flow crunch and limit your ability to invest in your business. And, if it’s possible, get all or part of the payment up front.
   
   
7. Track Cash Transactions Carefully
   Most bookkeeping programs have easy ways to track cash. Doing so will make your accountant happy and give an auditor less to scrutinize.
   
   
8. Focus on Bank Transactions, Not on Receipts
   Bank transactions are the backbone of your financial systems. So, while your receipts and bank transactions should match, the bank records rule.
   
   
9. Save Your Receipts
   If you’re audited, receipts will provide much more information about your purchases than a bank transaction can. So keep that shoebox handy. And if it is getting full, check out this article to see how long you need to hang onto paper records. Or better yet…
   
   
10. Let Your Bookkeeper and Accounting Software Make Life Easier
    Make sure you’re taking full advantage of your accounting system by using automation, mobile apps, and any other feature that can help scan receipts, categorize expenses, and generally make things easy. To learn about managing your books with software, a bookkeeper or both, read “Do You Need a Bookkeeper?”
    
    

For more tips for running and growing your small business, visit Index by Pinger.