Cash may be king, but it needs a bit of extra attention when it comes to DIY bookkeeping. You don’t ever want to lose track of your cash, and unlike checks or online payments, cash doesn’t come with handy documentation. Thankfully, once you have a simple system in place, documenting your cash flow is easy. Most small businesses need accountants so that bookkeeping, tracking expenses, and recording transactions can be automated without having to look into every detail. It allows a small business owner to focus on other pressing matters.
What does a bookkeeper do for a small business?
Bookkeepers handle ongoing, administrative duties for small business accounting, including:
Manage accounts receivable and accounts payable
Prepare financial statements
Set up and manage technology and tools
Stay up to date on laws and regulations
Work with your accountant, tax preparer, and tax planner
You should consider electronic invoicing to make the process easier and faster. Sending an invoice within 48 hours is a great account receivable practice to boost collection. You can get additional help with paycheck issuing, employee tax withholding, and payroll tax return filing. A safe way to protect the cash flow is to track how long it takes for the clients to pay the invoices. There are numerous types of outsourced bookkeeping services you can hire.
Chase money due to you
As the person seated behind the front desk, a company’s receptionist is in control of visitors’ first impressions of the company. Here’s how to ensure those first impressions are positive ones. Getting the right influencers to take notice of your business is a skill.
Further, these best practices can also point the way to insights that can lead to small business growth. Proper management of a business’s finances, and having someone dedicated to that process, is a crucial component of success for small businesses and startups alike.
Understand the Income Statements and Balance Sheets
As a result, you can experience gross income deductions before calculating the tax bracket. Keep records of your business transactions for 6 years if you don’t report income and if the income represents over 25% of your return gross income. However, you may reach a point where no enthusiasm or persistence bookkeeping tips level can help. Bookkeeping is often the first aspect of the business to suffer. It’s helpful to create income statements because they compare the current numbers to the budget, but also the historical performance of the business. This gives you plenty of room to spot errors you should correct.
- We believe everyone should be able to make financial decisions with confidence.
- Having a client owe you money for services, especially at the end of the year, isn’t the same as having that money in your business account.
- Keeping track of bookkeeping tasks as a small business owner can be challenging.
- For example, tools like Intuit’s Quickbooks automate your bookkeeping and represent data through engaging graphs.
There are many steps small businesses can take to minimize their income taxes. Throughout my career as both a practicing certified public accountant and an educator, I’ve developed a list of easy-to-use tax tips that I am happy to share. Keep Organized The most important step to minimizing your small business tax is… Don’t rely on your bookkeeper to analyze your accounting reports—their job is to input data into the software.
Remember Your Tax Deadlines
As much fun as a last-minute, panic-fueled bookkeeping cram session can be right before tax time, you can do your future self a favor by taking care of routine bookkeeping tasks every week. All of your transactions only need to be recorded once with single-entry accounting, and they may be categorized as either a cost or an income. This is a simple approach that works well for businesses that don’t have a lot of expensive inventory or tools.
Allocating some time each week to do this will enable you to become more familiar with your weekly expenses, stay informed about current invoices, and manage your cash flow better. You can use this time to monitor and evaluate your income and expenses each week, while quickly tracking down and dealing with any issues that might arise during the week. Logging expenses and income are the basis for generating these three key financial statements. When combined with the balance sheet, however, the cash flow statement can show whether a company has sufficient cash to meet its current obligations.
Hire a Pro to Set Up Your Accounting Software
An easy practice is to set aside a block of time whenever your credit card statement is due and combing through that month’s transactions to ensure they are accurate. This should typically take an hour or two and will simplify your life come tax season. Pick from a wide variety of cloud-based accounting project management software that gets bookkeeping in order, streamlines cashflows, and helps you stay updated on finances. Be sure to compare your actual results to your forecasted cash flows.
If you do decide to outsource your bookkeeping, both Eversmann and Hattrup have suggestions on what qualities to look for in an individual or a firm. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. Put this on your to-do list once you get a social security number as a sole proprietor or an Employer Identification Number as a professional service firm founder. When companies use bank finance to fund their daily operations, they often struggle to pay back the high-interest debt. Do adequate due diligence before taking on any external funding. Owners of C corporations (C-corps) and S corporations (S-corps) must pay themselves a reasonable salary and run it through the payroll system like any other employee.