8 Small Business Bookkeeping Tips

These tips will help you be more successful with the bookkeeping for your small business.

Business Bookkeeping Tips

Small Business Bookkeeping Tips #1

Online Business Bank Accounts

This first of the small business bookkeeping tips is something many small business owners still get wrong by not doing.

All new business owners should make it a priority to open a new bank account for their business, preferably an account with online access, to keep business funds separate from personal funds. 

You do not want to be processing transactions for your personal expenses within the bookkeeping of your business, it's a waste of time.

It’s even worse if you are outsourcing and paying a bookkeeper to process your accounts with these personal expenses mixed in…

… And they will have to be processed if they are mixed up with the business transactions. What do we mean by processing? We simply mean they have to be entered into the bookkeeping system and coded to drawings. Seriously, what’s the point?

If you need to use business money for personal expenses, just do a bulk transfer to your personal account on a regular basis like once a fortnight so that the bookkeeper isn't having to deal with a million small personal transactions and making you pay for their time.

Also, open a business savings account and set aside money from your business earnings every month to pay tax at the end of the financial year. 

Bank accounts with online accessibility is definitely the way to go now. It is quicker and easier to login online to make payments and keep up with the bank reconciliations in your bookkeeping software, than to wait for the bank to post a statement, or writing out cheques to make payments.

Small Business Bookkeeping Tips #2

Best Bookkeeping Software and Other Programmes

The type of bookkeeping software you get will depend on what you need out of it. Many software providers offer different levels, here are some examples:-

• Cashbook

  • Ledger and Cashbook
  • Ledger, Cashbook and Inventory
  • Ledger, Cashbook, Inventory and Foreign Currency Transactions
  • Ledger, Cashbook, Inventory, Foreign Currency Transactions and Point of Sale

At a bare minimum, you need a Cashbook. You can keep a Cashbook in Excel, or even in a school exercise book. Go here to see an example.

Generally, a small business can get by with software that can do:-

Cashbook, Ledger, Bank Reconciliations, Accounts Receivable and Accounts Payable.

Excel, or the free OpenOffice Spreadsheet, make good supporting programs for bookkeeping.

Most bookkeeping software modules provide the ability to export various reports to Excel for easy manipulation and personalization, to produce charts for quick reference or to combine different aspects of reporting from one period to the next.

Small Business Bookkeeping Tips #3

Business Logo

You will need a logo to put on your sales invoices, business cards, brochures, website. 

You don’t have to go all out and pay hundreds of dollars for this. There are many online businesses that offer logo designs at very reasonable prices (try Fiverr to start with). 

If you’ve got some confidence with MS Word or OpenOffice or even Paint you can design your own logo. It can be as simple or as complicated as you want. 

Once you’ve got a design you are happy with you need to save it as an image (such as JPEG or PNG). If you’ve done a logo in Word you can press Ctrl, Prnt Screen on your keyboard, this will place a copy of your screen/logo onto the clipboard.

Open up Paint (a free program that comes with Windows or you can download Paint.Net for Windows or Paintbrush for MAC.). Click on Paste which will place your screen shot into Paint. 

Edit the image to the size you want; you might have to reduce the amount of white space around your logo. Once happy with it, save as the jpeg or png image. 

You will then be able to import it into your sales invoices, website etc.

Hint: it is better to design the logo large and then reduce it down if you have to fit it in a small space on an invoice. This is better than designing too small and then having to enlarge the image which causes loss of quality and blurriness.

Small Business Bookkeeping Tips #4

Monthly Bookkeeping Reports

It’s surprising how many business owners have no clue if what they are doing is working until it’s too late i.e. they suddenly find themselves with no money and huge debts. Avoid this scenario by being pro-active about keeping your bookkeeping system up to date and producing reports at least once a month. 

Learn how to read and understand those reports. Yes, it’s probably something over your head and you’d rather not bother with it but you should. 

If you are going to own and run a business you can’t ignore this aspect.

The two main reports to start with are the Income Statement and the Balance Sheet.

Small Business Bookkeeping Tips #5

Taking on Employees

Employees in Bookkeeping

If you employ people in your business make sure you do the responsible thing and pay their wages or salaries on time. Employees rely on being paid on time to eat and pay their bills.

With each pay run, make sure you set aside savings to cover the PAYE deducted from the employee’s pay. This is not your money. It belongs to the government.

Make sure you file your PAYE returns on time and make the payments on time. Don’t ‘forget’ to do these things. Filing or paying late can incur fines for your business (a real waste of your business funds).

You could try and do the payroll manually but these days you can get reasonably priced payroll software, desktop or online, which makes the task quick and easy.

Small Business Bookkeeping Tips #6

Introducing New Systems

There are many new software programs being introduced to help small businesses do better, work faster, be more efficient, and improve the bottom line and so on. They are fantastic aids for streamlining business processes and the developers work really hard to have them working just right …. 

…. but implementing too many new systems close together can be really overwhelming for employees and exhausting for the business owner/manager.

The owner or manager needs to consider carefully whether a particular system is worthwhile introducing without ending up swamping the employees with a lot of extra and distracting tasks – distracting in that they might eat into the important time necessary for actually doing the work that produces income for the business. 

It takes people time to learn new systems and form a habit in completing the tasks related to those systems. People can carry out habits without thinking but new tasks require a lot of thought which slows down the income producing work and causes stress if the Manager is impatient expecting the employee to ‘get it’ immediately.

Introduce one new system at a time and give the employees time to learn them and get into the habit of completing them easily, before introducing the next one. 

Be prepared for some down time in production whilst employees are learning the new systems – make sure you include this in your budget.

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