Top 13 Bookkeeping & Accounting Tips for Small Business Owners

bookkeeping small business

In addition, when times are tough, you can ensure there’s money in the payroll account, even if your primary account is overdrawn. There are few things worse for employee morale than bouncing payroll checks. Shifting to electronic invoicing can help send invoices faster real estate bookkeeping and easier. Approximately 58% of finance professionals have shifted to digital processes as a result of COVID-19. Invoicing within 48 hours is an accounts receivable (A/R) best practice because it helps speed up collection, which increases your business’s cash flow.

  • It’s easy enough for an inexperienced bookkeeper to learn but feature-rich enough that a more demanding user can make use of its advanced accounting tools.
  • Depending on the way you’ve structured your business legally, you’ll have different tax consequences.
  • A simple search for “Bookkeeping Templates” will yield numerous results.
  • You just have to decide whether you want to spend the time upfront building your records or take time out when you’re in the middle of sales or purchase forms.
  • It’s never too early to take ownership of your bookkeeping policies.
  • If a general ledger is like a book, a chart of accounts is like a book’s table of contents—it’s a list of all the accounts your business uses to record transactions.
  • By streamlining tax processes and working with tax professionals can save money.

Having all your records in one place, recorded in a neat and organized format, eliminates the need for last-minute scrambling to gather information for tax returns. If you’re traveling and have numerous related expenses on the road, for example, then you can often take pictures of receipts with your smartphone. Some accounting services attach these receipts to a manually entered expense form. Others, such as Intuit QuickBooks Online and Xero, read the receipts and transfer some of their data to an expense form using optical character recognition technology. Accounting services let you easily create any transaction that a small business is likely to need. The most common of these are invoices and bills, and most of the services we reviewed support them.

Find high-quality accounting partners

Without basic bookkeeping practices, it’s easy for financial transactions and spending activities to get out of control, which can lead to confusion, disorganization, and loss of profit. Bookkeeping is a core part of business finances and can impact the growth and success of your small business. It can encompass a variety of tasks — from basic data entry in a software platform to working with certified public accountants — and is the backbone of your accounting and financial systems. At least once a week, record all financial transactions, including incoming invoices, bill payments, sales, and purchases.

Reviewing these accounts on a routine basis can also help you keep on top of your financial position and identify potential issues or areas of opportunity. Setting up and managing payroll is often part of the bookkeeping process in a small business. Some businesses use separate payroll software, which can connect or integrate into any bookkeeping or accounting software system.

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While hiring a bookkeeper can be more expensive, it can also provide a sense of personalized attention and support. However, if cost is a concern, a bookkeeping service may offer a more cost-effective option. These services typically provide accounting software and can assist with organizing bank statements, expenses, accounts, and taxes on an ongoing basis for a set fee. Plus, many bookkeeping services offer 24/7 access to your financial records, giving you the flexibility to manage your business finances on your own schedule. Xendoo is an online accounting and bookkeeping service dedicated to small business owners. They simplify your bookkeeping and accounting and deliver the financial attention you deserve, unlike a traditional CPA relationship where the focus may not be on your big picture.

bookkeeping small business

Without clean financial records, you may be at risk of paying settlements or tax penalties for avoidable financial errors. You also may be able to prevent or uncover fraud, whether from customers, vendors, or employees. Fully automated accounting software makes keeping your books as easy as possible. Enter some basic business information and we’ll send you up to five free quotes customized to your unique bookkeeping needs. Alternatively, in-house or outsourced bookkeepers can update your books for you, typically for a monthly fee. But whether you plan to do bookkeeping yourself or outsource it to an accountant, it pays to understand the basics of bookkeeping.

Separate your business and personal expenses

Investing in accounting software is often faster and more cost-effective than relying on a human bookkeeper. The software can help you avoid human error in accounting and provide more accurate financial statements. The integration of bookkeeping apps into small business operations has become a necessity in modern times.

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