Running your own business is an exciting prospect and it’s all too easy to overlook the basic, day-to-day tasks like keeping on top of your finances.
Getting to grips with bookkeeping may not be at the top of your to-do list when you first start out, but it should be a high priority if you want to make your business a success!
Here are our tips on bookkeeping for small businesses:
From the earliest days of your business, you need to keep a record of everything you spend and what comes in, whether it’s a new set of pens or six months of rent.
As well as listing all you spend and receive in a spreadsheet, you also need to keep the receipts and invoices as evidence to accompany these records.
We would advise doing this as you go, such as printing off a receipt or invoice for an online purchase straight after you make it, rather than going back and having to do it weeks or months down the line.
It also helps to keep files in chronological order, as well as introducing a basic numbering system for invoices.
At the end of each month, check your bank statement against your spreadsheet and note down whether everything is accounted for.
Set time aside
One of the key things to remember about bookkeeping for small businesses is that setting aside dedicated time each week to the job can make a significant difference to your success.
The hours spent on these tasks may seem like time you could be spent increasing your business’s’ earnings, but not keeping on top of things could quickly see you losing money in the long-run.
Being disorganised and putting things off is not an option if you want your small business to survive.
Don’t mix work and pleasure
One of the first things you should do as part of your bookkeeping list is set up a separate business bank account.
Make sure you keep business and personal expenses apart and be strict – don’t let the two merge or you’ll have a much harder time when it comes to preparing your books for an accountant or HMRC.
Know your limits
Bookkeeping for small businesses is all about recording your daily transactions, but it also involves a number of other tasks such as preparing and sending out invoices, dealing with wages and chasing late payments from clients.
These jobs can start to take more and more time as your business grows!
If it gets to the point where you’re struggling to keep up with everything, then it might be the right time to hire someone.
The Institute of Certified Bookkeepers lists specialists in your area, as well as providing resources for business owners.
Although it might be an extra expense, having a second pair of eyes look over your accounts can certainly be a good thing and can point out any potential trouble before it’s too late.
Remember that a bookkeeper doesn’t necessarily need to look at the wider financial implications of your transactions – that’s the job of an accountant – but rather focus on the day-today activities and track the finer detail.
Turn to technology
While a pen and paper is all you really need for basic bookkeeping, using spreadsheets and saving online copies of receipts and invoices is a safer method – just make sure you back-up your files or save them to a cloud in case of any technical disasters.
For those looking to speed up the job, there are hundreds of online software packages now out there which can take away almost all of the work required.
Bookkeping has its benefits
Bookkeeping for small businesses may seem like a chore, but looking at what you spend and earn on a regular basis can also help you really understand your business and the finer financial details.
Having a spreadsheet of your incomings and outgoings will help you to spot trends and determine whether you can save money on certain things which you may not have otherwise thought about.
Bookkeeping for small businesses: summing up
Keeping on top of your books doesn’t require you to be a maths genius, but it does need organisation, time and care – and the ability to recognise when you need extra assistance.
Applying these basics will lay the foundations for a savvy, successful business and keep you on track as it continues to grow.