Many small business owners, including doctors and other professionals, start their business because they had a passion for the service or product they are providing. You will seldom hear any business owner say that they love the bookkeeping and accounting side of their business. It’s normally the most dreaded part of owning a business. Unfortunately, it is one of the most important parts of running a successful business.
It’s important to start correctly tracking your finances from the very beginning of your business, BUT it’s never too late to start! The sooner you set up and follow correct bookkeeping procedures the better. Once these procedures are set up it’s very easy to accurately track your business finances.
Believe it or not business accounting / bookkeeping can be simple! Money comes in (hopefully) and money goes out. Proper bookkeeping is simply tracking these financial transactions and placing them in the correct chart of accounts in your accounting system (Income, expense, liability, etc.).
Gone are the days of “Old Style Bookkeeping!” Business owners no longer have to manually track their finances on an excel spreadsheet or have disorganized file cabinets (or shoe boxes) full of paper receipts, bills and other financial correspondence. In the current age of technology business bookkeeping is much easier to understand and control. There are many accounting management software systems out there to help businesses, so use them!
There are many best practices when it comes to small business bookkeeping, but here are the top 3:
Keep your records organized – It’s very important to create an efficient system for keeping track of receipts, bills, policies, etc. Most paper can easily be converted to an electronic copy with a scanner or a camera. In addition, there are multiple receipt tracking and cloud storage options that all you files can be quickly accessible.
Keep your personal finances separate – Personal funds should always be kept separate from business funds. It is important to have separate banking and credit card accounts to help keep finances easily separated. If finances become intermingled, these transactions must be accurately documented accounted for in your accounting system.
Use cloud-based accounting software – There are numerous options out there for cloud-based accounting. They can provide real time banking information and help business owners feel more in control of their finances. It’s efficient, it’s inexpensive and it’s accessible from most anywhere!
Before any business owner starts a new accounting / bookkeeping system (or upgrades their current system) it is very important to have the help of an experienced bookkeeper and/or CPA. Having experienced help and tracking your finances the right way will save the business future headaches, time and money.
Having a profitable, efficient small business is a key component for millions of people who want to live their ideal 100 Year Lifestyle. Take the time to get your books aligned and you are more likely to enjoy an abundant and sensational century.
- Understanding the Basics Part 2: Financial Chart of Account / Financial Statements & Reports
- Understanding the Basics Part 3: How to Classify Finances in the Chart of Accounts
- Understanding the Basics Part 4: Best Practices
- Electronic Bookkeeping and Paper Filing Options
- Converting to Accounting Management Software
Heather Ratliff is a small business consultant offering business solutions to her clients. With 20 years of experience and many diverse skills that make her uniquely qualified to assist busy individuals, entrepreneurs and small business with all their business related needs. In particular, she has extensive experience in business formation and operations, bookkeeping, and human resources consulting. These services could be of great value to any small business, as she can potentially help reduce the need for multiple employees to manage these positions. Contact Heather@blakebizsolutions.com.