Are you the kind of person who maintains financial records in the head? Not only is it unreliable to other stakeholders such as creditors and customers but also dangerous to your health. Normally, you will be required to constantly think about every tiny detail of your operations. But that’s fine if you’re a genius, although a disaster in waiting for an average human.
It goes without saying that proper bookkeeping is inevitable if success has to share a sentence with your business name. Well, after reading this article, you’ll learn about some of the best tips for bookkeeping like a pro that you probably aren’t, just yet. Let’s dive right in!
Tip #1.Plan your Expenditure
If there’s one thing that crumbles businesses faster than the common causes, is the failure to plan your business expenses. If you’re not going to involve a qualified consultant in your bookkeeping journey, chocking your business up with loans might be the least of your worries. You’re also likely to miss out on business opportunities resulting from misappropriation of funds.
Tip#2.Separate Personal and Business Finances
Sounds obvious, right? But impractical to many. One way of ensuring a clear separation of finances is through having a separate bank account for the owner and the business. This will spare you the pain of having to sift through your transactions to separate your personal and business transactions such as bank payments.
Tip#3.Get Cloud Bookkeeping Software
Long gone are the days when companies maintained huge files in cabinets that were more spacious than some studio apartments—well, almost that big. Cloud applications offer real- time access to information by the owner. Of course, this doesn’t eliminate the need for expert accounting guidance.
Tip#4.Pay Taxes on time
Taxes are the main income of the state—imagine how much you guard your income stream and equate your ability to do so to that of government. The IRS has been known to impose hefty fines and penalties to individuals or businesses that default in their tax payments. In some instances, businesses have had to be auctioned or liquidated for owing the state. At this point, closure would be your easier way out. Be sure to keep taxes in check by having a clear layout of the deadlines for filing and remittance of taxes and other statutory deductions.
Tip#5.Keep an Eye on the Debt Level
You’ve probably seen companies run out of business with a huge Trade Receivables list, right? Well, this is common to start-ups and can ruin a 100% Equity-financed business in what may seem like an instant. There is no lesson for anyone willing to be lenient to others and not to his or her business. Wake up and realize that worthy customers are not easy to come by, don’t expect them from every corner of the street.
Tip#6.Always Set an Audit Trail
An audit trail allows you to trace your financial transactions should need to arise. Developing such a habit sets a logical way of doing things which can be quite beneficial when filing your returns or during an audit.
Over to You
Bookkeeping is a complicated term for staying organized. As much as you may have your own code of conduct when it comes to proper bookkeeping, there really aren’t hard rules about keeping proper books of accounts. Tip: Be sure to understand the three golden rules of bookkeeping and accounting and apply them consistently.
Did we leave out any tip that works for you? We’d love to hear about it in the comments section!