Bookkeeping for small business is no small matter. With the right tools and techniques, any company can safeguard their financial future through smart bookkeeping.
Today, let’s look at five of the most important things you should and should not do when it comes to your small business bookkeeping.
5. Use Double-Entry and Accrual-Basis bookkeeping.
Using these two accounting techniques may seem like a bit of a hassle compared to single-entry and cash-basis, but in the long run, it’s a lot better.
For one thing, using double-entry and the accrual basis together provides a much more accurate reflection of your company’s true financial status. These methods provide a greater level of detail, and they help you distinguish your earnings from your liabilities.
And that is important, because as your company grows, beyond a certain point you will by law have to switch to these anyway. So, not only will you be able to see with better accuracy when you actually reach that point, but you’ll already have practice, and no trouble making the transition.
4. Bookkeeping for small business should include detailed reports.
You might not yet be doing millions of dollars in monthly revenue, but that doesn’t mean you have any less of a need to understand, on a very clear level, exactly where your money is coming from, and where it’s going.
Without detailed financial reports, it can be quite difficult to understand where your company can make improvements and where you’re doing well. In turn, that would make it difficult to plan for the future and see where your opportunities for growth are.
The bookkeeping services that we provide at SyncLedgers include these kinds of detailed financial statements and reports as a matter of course.
3. Don’t mix earnings with borrowed funds.
It’s important to set up your business banking relationships appropriately. Piling all of your funds into a single business account, while convenient, can be a recipe for disaster.
It’s much healthier to maintain separate accounts for income derived from earnings, and the money you borrow from financial institutions. That way, it’s harder to lose track of how much comes from each source.
2. Bookkeeping for small business taxes can be simple, but you still need a CPA.
Many bookkeeping services will claim that they can take care of all of your tax needs for you. You should understand that this is only true if they provide the services of a certified public accountant.
A CPA has different training from other accountants and bookkeepers, the latter two of which are not qualified help you maximize your deductions and ensure that you’re in full compliance with applicable tax laws.
What a service that provides bookkeeping for small business can do, however, is help you and your CPA by organizing all of the documents that are necessary for their analysis.
1. Track your transactions every day.
One of the most common bookkeeping problems that small businesses have to deal with is a backlog.
It can be tedious to go over your transactions every day and enter them all into the ledgers, but it’s a lot better than losing an entire weekend at the end of the month to make sure that your books balance.
Services like SyncLedgers’ bookkeeping for small business make it simpler, though. With us, you don’t have to worry about taking care of it every day, because we take care of it for you.
If you’re struggling with implementing regular bookkeeping practices, or you’re having a hard time figuring out how you can afford to keep a full-time bookkeeper on staff, give us a call. We’ll be happy to listen to the details of your unique situation, and work together to make the right solutions attainable for you!