A business owner’s job is never ending. In addition to ensuring that the business is running smoothly and meeting customer expectations, business owners are also required to keep track of important data and information that is crucial to the business’ operation. Many business owners prefer to do the “bookkeeping” in their heads, a method that – while proven sufficient – is not highly recommended. As federal laws and regulations become more stringent, business owners are seeing a need to reevaluate their current processes and move their bookkeeping to a more reliable system.
If your business does not have a financial system and specific processes in place to account for your company’s financial situation, it’s time to invest in a new bookkeeping and accounting system and processes. This will help you gain a better handle over your company’s financial situation, help you better meet your business goals, and maybe even increase your profit.
We’ve created a few crucial bookkeeping and accounting tips to help business owners just like you prepare their company for financial success. Keep the following tips in mind as you reevaluate your company’s bookkeeping and accounting processes and procedures:
- Track your expenses.
This may seem obvious, but you’d be surprised how many business owners skip this crucial step. Tracking your expenses is extremely important, otherwise you may miss crucial tax write-offs or put your business at risk during an audit. Many business owners track their expenses by using a single credit card for the business only. Once the credit card statements come in, they enter the information into the bookkeeping and accounting system to they can keep track of all their purchases throughout the year.Business owners should also write down business trips, lunch meetings, and other events that require a company pay-out or reimbursement in their day planner (or phone). This habit, while hard to establish at first, will ensure that you have all of the information you need for your tax records in the case of an audit. - Plan for any major expenses.
Take a look at your business goals for the next five years and plan out any potential expenses you see on the horizon. If your company is expecting to upgrade its computer software a year from now, go ahead and put it on the calendar (as well as in your budget). This will give you adequate time to prepare for the upgrade, both financially and operationally. - Record your deposits accurately.
Implement a system that is designed to keep your financial information straight. You can record your deposits in a variety of systems, such as Excel, Quickbooks, Peachtree, or Sage accounting software. Business owners make a variety of deposits into their bank accounts every month; therefore, it is crucial to keep meticulous records so you don’t accidently report on income you don’t actually have. - Put your tax money aside.
We cannot stress this point enough. Putting money aside for your taxes as you generate income is extremely important as you can be penalized for not filing and paying quarterly taxes on-time. By automatically setting aside money throughout the year, you will be more than prepared to pay your quarterly taxes on-time, every time. - Watch your invoices.
You cannot do it all. Assign someone within your company to track your billing process, for late or unpaid bills will only serve to damage your cash flow. Once you have set up someone to keep track of your company’s invoices, establish a process for follow-up. This can either be in the form of a second invoice, phone call, or letter stating that the client will be billed an additional fee if the invoice remains unpaid. Just because you’ve sent out the invoices does not mean the billing process is over; it has, in fact, just begun.
Stay tuned to our blog for more bookkeeping and accounting tips. If you are a business owner and would like some help developing new bookkeeping and accounting processes, give us a call today at (703) 834-0776. We would be more than happy to help you find the best way to keep track of your company’s finances.