By Emily Coltman
When you’re running a small business, it’s unlikely that taking care of your financial accounts is especially high up on the “most enjoyable things about working for yourself” list.
While it may not be much fun to do, bookkeeping is nevertheless an incredibly important task that needs your full attention. After all, tidy, accurate books can help you to see vital financial information that could help you make informed decisions about your business’s future.
Here are five bookkeeping tips that could save you time and help you run your business better.
1. Don’t let the dust gather on your accounts.
There’s probably always going to be something that’s more fun to do than your bookkeeping. But if you don’t put in the work to keep your books up to date, you’ll find it much harder to see important details such as who hasn’t paid you and when your taxes are due.
It’s a good idea to schedule a regular amount of time – such as an hour per week – that you can dedicate to your bookkeeping. Use that time to send invoices, track costs and monitor your cash. You’ll be surprised how much less of a task bookkeeping becomes when you tackle it “little and often.”
2. Have a separate bank account for your business.
Keeping your own personal finances separate from your business finances is very important to make sure you pay the right amount of tax on what your business earns. The easiest way to keep your business cash separate is to give your business its own bank account and use that only for business money.
3. Track everything you pay for personally.
Even with a separate bank account for your business, there will still be times when you pay for a business cost personally. For example, if you go by train to visit a client and buy the ticket using your personal credit card, this still counts as a business cost even though the business didn’t pay for it initially. Keep track of costs like these but be careful to keep them separate from those paid for from your business’s bank account.
4. Keep your paperwork organized.
You, your accountant, and the authorities, may all want to quickly find a particular document in your records, such as a receipt or bank statement. Whether you’re keeping your business records electronically or keeping physical pieces of paper, make sure you organise, sort and file your documents so that you can find anything as soon as you need it.
5. If you’re not sure, ask for help promptly.
When filling out your books, it’s a good idea to stay organised and assign different business costs to different categories. However, you may find you don’t know which category a cost belongs in. For instance, should a subscription to an online magazine go in under Books and Journals, or Subscriptions?
Similarly, you may find you don’t know whether a particular cost counts as a business cost or not, or how to treat something for sales tax.
If you aren’t sure, seek professional help or clear it up with the tax authorities as soon as possible. The query is unlikely to resolve itself and the longer you leave it, the more likely you are to forget what the problem was. You could even risk penalties for filing incorrect forms.
Keeping accurate financial records that you update regularly is a vital part of running a small business. Make sure you don’t put yourself at a disadvantage by neglecting those books.