Knowing the facts is an essential step in making effective financial decisions for your business. As a smart business owner, you always need to have a concrete view of your income and expenses to keep your business running smoothly.
Keeping your business accounts organized not only spares you the trouble of missing out on unnecessary expenses, but it also eases your way through tax filings.
However, keeping track of the many transactions your business goes through every day can be complex. To help kick-start the process of getting organized and updated accounts for your business, here are some helpful tips.
Establish a Filing System
Organizing files with labels is a good method for successful recordkeeping. Here are some basic steps to start your filing system:
1. Create data categories. You may start with broad categories, such as accounts, receivables, and payables. You can further organize the files under each category by subcategorizing them into separate folders for easy access.
2. Alphabetize records. Records begin to pile up over time. To avoid wasting time scanning through multiple folders, alphabetize your files. By alphabetizing files within each category, you can quickly find needed documents without going through everything in each file.
3. Use a color-coding scheme. Reduce the chances of misplacing your files by employing a color-coded filing system. In this system, critical letters or numbers on each file folder name are assigned with colored labels. When your file folders are properly organized, the colored labels create a unified block of colors. This scheme makes misplaced folders easy to spot because of the color mismatches that you see within a given block.
Find Cloud-Based Accounting Software
Manage your accounts with less paper by importing all your financial transactions into easy-to-use and reliable accounting software. Many tech companies offer a broad range of accounting applications that you can choose from. To guide you through your search for the perfect accounting software for your business’s needs, here are some guidelines:
1. Identify the nature of your business’s accounting needs. There is an accounting solution that is specifically designed for task-based businesses or freelancing services. Some have built-in time tracking and task management tools while other software is built for businesses that require inventory. By understanding the nature of your business operations, choosing add-on services for your software, such as data-specific storage, is made easy.
2. Narrow your options by sticking to a budget. Although accounting software won’t necessarily break the bank, it does vary in price. Some options require small payments on a monthly basis while others ask for a large upfront payment. Identify which features your business will need to help you come up with a good estimate.
3. Talk to your neighbors. Find out what everybody else is using in your industry. Ask their reviews on the software they’ve been using. By weighing the pros and cons of particular software, you can save the cash you might be throwing into the bin once you fail to get the right software for your growing business.
Keep Business and Personal Accounts Separate
When it comes to managing your finances, the rule of thumb is to avoid combining personal and business finances. This rule can never be overemphasized since many business operators tend to use business cards to purchase personal necessities loosely. To help you concretely adhere to this simple yet tricky rule, here are some tips:
1. Track your expenses separately.
2. Use separate bank accounts.
3. Store business and personal receipts in different file folders. By doing so, you get to assess opening and closing balances for each quickly.
Talk to a Trusted Bookkeeper
Focus on growing your business by hiring a trusted bookkeeper for your finances. A lot of bookkeeping services today, such as Irenas Bookkeeping, offer local onsite and cloud-based services. Here are qualities that you can assess in choosing the right bookkeeper for your business:
1. Choose someone who understands your industry well. Ask about his or her previous bookkeeping experience to help you identify if they have a relevant experience and skill set for your business operations.
2. Ask if your potential bookkeeper is open to working with your business’s accounting software. By selecting a bookkeeper who understands the functionality of your software, less time and money will be spent in making financial mistakes and consolidating records.
3. Lastly, choose to work with a bookkeeper who takes care of your clients, including your suppliers and workforce team. Chasing after payables and receivables can be stressful; you better have someone patient enough to handle financial woes without hurting valuable client relationships.
In a Nutshell
Whether you’re running a small or large business, it is important that you employ a systematic approach towards accounting your finances. Jot every figure down, don’t bank on memory. Remember, as a smart business owner, having a transparent view of your finances will help you make decisions essential to your business’s growth and survival.