Does a bookkeeping system help? 

Despite how important bookkeeping is to keep a business running, many owners avoid it. But putting off record keeping tends to cause more stress and time to rectify since they won’t have a clear picture of their finances.

If you’re a small business owner, continue reading below where we’ve highlighted five key bookkeeping practices that are guaranteed to help you stay organized.

1. Track Constantly

Owners should now wait until the end of the quarter or the end of the year to track expenses and income. Instead, transactions should be logged and saved as soon as they come in.

Filing an expense in real time prevents it from being forgotten and ensures that there will always be a copy. This also gives owners a live update on their financial standing, which can empower them to make better, more informed business decisions.

Tracking can be done with a simple digital spreadsheet (that is saved and backed up regularly) noting the date, type, and amount, or with accounting software like QuickBooks, which can automatically detect and file things on your behalf.

2. Separate Business from Personal

Separating business expenses from personal expenses is critical to prevent mixed records. Not only will mixed accounts skew the perception of the business, but owners will eventually need to sift through every transaction to determine if it was personal or business. This time-consuming task usually means that things get missed and deductibles that could have been claimed are overlooked.

Having to sort through transactions this way also takes countless hours to complete, so owners who mix finances should beware of the added workload or expect a high accounting bill.

Avoid these issues by simply opening a dedicated business bank account and credit card so nothing could be mistaken as personal.

3. Use Accounting Software

There are many helpful software systems that owners can use to keep their books in order. QuickBooks and Xero are favorites among owners given the simple interfaces and automation abilities. Both of these apps are able to save and categorize a file as soon as it’s been uploaded, by noting the date, type, and amount, which means that all an owner needs to do is upload a photo of it.

These apps can also be used to generate invoices quickly, save copies of them, and flag you with push notifications if any bills are unpaid or need your attention.

Before deciding on an app, research the various features and consider doing trial runs in order to determine which one will be best for you.

4. Reconcile Regularly

Every account should be looked at regularly to see if all of them match your records. Things like bank statements, credit card activity, accounts receivable and payable should be reviewed weekly or bi-weekly in order to gauge your standing.

Doing this helps to spot things like unpaid invoices, fraudulent charges, or low balances, all of which will ensure issues are dealt with quickly and that the company’s actual cash flow is verified.

5. Plan Ahead

Unexpected bills can be devastating to small business owners, which is why they should try to plan ahead as much as possible. Expenses like inventory purchases, tax payments, and payroll are all predetermined and should be noted on a calendar. Having these reminders helps owners prepare for the future and make better business decisions based on their cash flow.

If you’re an owner that’s struggling with your books, call us at 407-328-5001. A member of our team at A.P. Accounting & Tax Services will review your current practices to see where you can improve.

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