A solid bookkeeping system is an essential part of running a successful business. No matter how big or how small your business is, it’s critical that your books are updated, accurate, and readily available. Doing this provides you with crucial information that can help keep your business financially healthy. Implementing the following bookkeeping habits will help ensure that you maximize your cash flow and decrease your stress.
Monitor Your Transactions Daily
One of your daily bookkeeping habits should be matching the cash deposits made by your business with the cash receipts shown on your bank statement and your cashless deposits. According to Andrew Desiderio, CPA and senior manager at Concannon Miller, some questions to consider include:
- Is cash being deposited by employees on the proper schedule?
- Do the amounts recorded as deposited match what was actually deposited?
- Do the deposits from all of your card companies through your merchant services provider match what you have recorded?
- Have your merchant services fees changed over the course of the month or the year? If so, find out why.
It’s also important to match your check, disbursements, and payments activity on a daily basis. Make sure: (1) Your checks paid match the dollar amount and payee name. (2) Your payments match your invoices. (3) There are no unauthorized payments on your account. Taking time to do these steps every day will help you keep your bookkeeping up to date.
Track Each and Every Expense
To keep that cash flow going in a positive direction, it’s important to track every expense. One easy way to do this is to have a credit card used solely for business, which can serve as a basic accounting system. When tax time comes around, it’ll be much easier to write-off relevant business expenses.
Because most card statements categorize expenses, you can see which outlays relate to which business activities. You’ll be less likely to pay cash somewhere and lose the receipt—and possibly those tax-time write-offs—for items like business meals, home office expenses, and printer ink, which can add up.
Make sure you keep all of the bank and credit card statements, profit and loss statements, balance sheets, receipts, invoices for sales and services rendered by the business, and employee expenses, which will enable you to establish a good financial ground for your business.
Conduct Monthly Financial Data Checkups
While it’s important to track your daily transactions, it’s also critical that you keep track year-over-year, and the easiest way to do that is to track month-over-month, which allows you to evaluate seasonality, anticipated trajectory, and growth.
When you track your income monthly, you can see which areas of your business are growing, decreasing, or are ready for potential improvement. There’s also an opportunity for you to see if your return on investment is higher in a particular area, which can lead you to invest more and continue to increase your cash flow. While there are often fluctuations, tracking your income every month can help you see long-term trends.
Invest in the Right Accounting and Document Management Software
The right software—like Quickbooks or Sunrise, for example—can help you track the basic accounting tasks of your business more efficiently. They’re relatively easy to learn and use, but it’s still recommended that you consult with an accountant to find a solution that best fits your needs.
The key to maintaining accurate books and keeping that cash flow heading in a positive direction is maintaining organized documents. This can be done with a quality document management solution. This tool helps streamline and simplify the process of managing financial documents like day-to-day expenses, payables, receivables, receipts, and invoices.
This reduces the amount of time you spend reconciling your books, and it also allows you to exchange and share files—everything from receipts and invoices to tax forms—with your accountant.
Turn to a Professional Bookkeeper for Help
On the other hand, just because you can do your own books doesn’t mean you have to. As a business owner, your schedule is always full. You probably feel like there’s a never-ending to-do list and that you’re pulled in a million different directions. Most business owners started a company to pursue a passion, and most often, that passion isn’t accounting. That’s why it may make sense to outsource some of your work that you don’t have the time or the expertise to do regularly, like bookkeeping and accounting.
While it’s an added expense, it helps to remember that a professional CPA will actually save you time and money in the long run. They’ll make sure that all of your records are in order and help you avoid any problems, fines, or fees down the road.
How To Handle Your Business Bookkeeping
Keeping your bookkeeping up to date can feel overwhelming, especially if you don’t have accounting experience. It’s often best to entrust this task to a reliable bookkeeper so you can have more time for your business, but it’s also essential to learn the basics so that you have your finger on the pulse of every aspect of your company. Using the above bookkeeping habits to keep your books organized will help you keep that cash flowing in a positive direction.
Edited content. Originally published by OnDeck Capital August 26th 2019 and written by Lendio. *