Bookkeeping is Essential, Here’s How to Make it Easier
Bookkeeping. Accounting. Taxes. Why do these three words make small business owners uncomfortable, even nervous?
Similar to medicine, the world of bookkeeping and finance is filled with professionals speaking their own language. While medical professionals are actually speaking Latin, accounting professionals are not. Terms like balance sheet, profit and loss, cash flow, accrual, and amortization may sound like Latin, but they are terms all business owners should know and understand.
That being said, when you combine these specialized phrases with the anxiety brought on by taxes and the dreaded IRS, it’s easy to see why many are so uncomfortable.
Though not the most glamorous aspect of accounting, bookkeeping is essential for a good foundation. It tracks the day-to-day activities of your business and keeps you aware of any changes. It can also alert you to fraud. Bookkeeping is more than just the information you gather the night before filing your taxes.
Here are a few tips to make bookkeeping easier:
- Keep it current. Bookkeeping can be a daunting task when left untouched for even a few weeks. Schedule time each week, or even each day, to update your bookkeeping software. No, Excel is not bookkeeping software. Though a great tool for bookkeeping, it does not have all the functions you need. If you are uncertain of what to use, talk with your accounting professional. They can help you select the right software for your business. Entering a few transactions each day is easier than hundreds at the end of the month.
- Try to automate your bookkeeping. Thanks to modern technology, there are tons of bookkeeping programs that connect digitally to online banking. Syncing your bank and bookkeeping software can reduce the time you spend manually entering data by pulling it over automatically.
- Regularly perform a financial review. Check your accounts payable to see what bills are due and avoid late fees by staying up to date on those payments. Go over your accounts receivable to see who owes you money. Is anyone past due? This should be done weekly to monitor cash flow.
- Reconcile your accounts. Make sure your bank statements match what you’ve recorded. Reconciliations should be done each month. Each quarter, you should take an even deeper look. Look for trends or changes in trends in your sales and expenses. Compare your current year’s data to last year’s. Reviewing your files can tell you not only when to spend but how to spend.
Staying on top of your bookkeeping may not be the most exciting part of your business, but working with the data more frequently will make it more manageable. As with any other skill, the more you do it, the easier it gets!
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