by Jessica Winter
I decided that my blog post this week would be a little different. Instead of my normal emotional message, I thought that sharing some of my own personal bookkeeping tips would be beneficial. With the recent pandemic there are a lot of small businesses throughout the nation that are struggling. Many businesses have taken out loans, applied for grants, or received some form of government funding. In order to have some of that funding forgiven, though, there are a lot of bookkeeping and reporting requirements that need to be done. This made me think of my own personal bookkeeping practices and some of the basic tips that can help you keep your business books up and running smoothly.
- Use some form of online bookkeeping program. There are so many options when it comes to bookkeeping software. These programs can be free applications all the way up to a professional platform that offers full service payroll processing and automatic customer invoicing. Our recommendation is that you use some form of online bookkeeping software to track your business income and expenses. You would be surprised how much you can learn from your business by just recording your daily bank account transactions. One of the benefits of cloud based storage is that you are not going to lose all of your bookkeeping information if your computer or harddrive crashes!
- Try not to use cash to pay for things. Cash is hard to track. It is nice to have on hand to be able to pay for smaller amounts, but there is no backup record of your transaction. Instead try using a debit or credit card. Your bank or credit card statements document the transactions that are made so you know that you have a business expense that should be included on your books. If you are old school like my husband, you can even use checks to pay for certain expenses and utilize the memo portion of the check to remind yourself what the expense was for.
- Separate your business and personal expenses. I would even take that a step further and recommend that you have two completely separate bank accounts that keep your business and your personal expenses separated. If you are a Sole Proprietorship or a Single Member LLC, you can take withdrawals from the business bank account and put into your personal bank account to pay yourself. But make sure that you pay for personal expenses out of your personal bank account. Keeping those expenses separated makes it easier at the end of the month reconciling your books.
- Keep track of your Accounts Receivable balance and reconcile it each week. One of the most important aspects of your business is the money that is coming in. You want to have a good understanding of the invoices that you have billed, when you billed them, what clients have paid and which invoices are outstanding. Make sure that you mark off invoices when the payment comes in, and check your balance each week to determine if additional invoices need to be sent out. You want to make sure that you are getting money in your business and that the payments are coming in at a timely fashion.
- Know when to ask for help. Bookkeeping and accounting can be confusing. There are so many financial reports and terms, and there are so many rules and laws when it comes to employees and payroll. It is completely okay to outsource an outside organization to do as little or as large of a number of tasks for your business. Hiring a professional to work a couple of hours a week for your business is more cost effective than hiring a full time employee. Having a knowledgeable professional do the work for you, gives you more time to spend growing your business instead of worrying about if a tax payment was figured and paid correctly.
At Quakerdale Business Services, we provide bookkeeping, human resources and payroll services to business throughout the State of Iowa. We help most of our clients stay up to date on their books, process their payroll, help them file their taxes at the end of the year, and we assist them in applying for loans and grants. We are a professional team that can provide knowledgeable insight regarding your business. Please let us know if we can help you!