10 Easy Bookkeeping Tips for Small Business Owners

Keeping good financial records is essential for the success of your business. The numbers in your bank account measure your business and here are some key bookkeeping tips that successful small businesses practice regularly.

Adopting good bookkeeping habits from the beginning will help ensure that mistakes are minimised and costly errors are avoided. These bookkeeping tips will are designed to assist you to balance your books every month and keeping control of the finances of your company.

As a business owner, it is important to learn and understand how bookkeeping works. Bookkeeping refers mainly to the record-keeping aspects of accounting. While you may hire a professional bookkeeper to carry out these basic duties, it is essential for the success of your business to keep your finger on its financial pulse and to understand the principles of bookkeeping. Follow these bookkeeping tips to make your business successful and sustainable.

10 – Easy To Implement Bookkeeping Tips

1. Keep Personal and Business Finances in a Separate Account!

If you mix the two, it will quickly become a complicated mess. Separate the bank accounts from the beginning. Make sure all your business transactions are processed through a business bank account and personal finances through the personal bank account. It will enable you to quickly determine your cash flow as you can easily see your income on the one hand and your expenses on the other to gauge how well your business is doing.

By having a separate business bank account and accounting software, you can set up a bank feed to automatically import the bank transactions. Sometimes it is even beneficial to have a business account with the same bank as your personal account.

2. Keep all of your Financial Accounting Records

As a small business owner, it is essential to keep all your accounting records including receipts and invoices for all business expenses, and all documents used in the day to day business transactions of the company. A good rule to follow is to throw away nothing in the bin. Always ensure you have all bank and credit card statements, profit and loss statements, balance sheets, receipts and invoices for sales and services rendered by the business.

Ensure that employees attach copies of receipts to their expense claims. As a rule, you have to keep all records for six years in case you have to refer back to them to answer a query, and also if the authorities need them for tax purposes or other reasons.

3. Filing and Invoicing have to be Completed Regularly

Small businesses should complete filing regularly or even daily, to keep on top of your paperwork. Keep sales and purchase invoices separately. Sales invoices are sequential.  You can file Purchase invoices in many different ways, but most importantly, your system has to be logical so you can put your hand on a document when you need to.

4. Keep Detailed Accounting Records of Petty Cash

It is essential for small business owners to keep detailed records of their petty cash transactions. Not only should you always insist on receipts, but also record every time you dip into your petty cash. If you reconcile your petty cash regularly, you minimise the risk of theft to the company. It is a particularly handy bookkeeping tip as you always stay on top of your petty cash transactions.

5.  Bank your Cash and Cheque Payments Daily

It not only minimises the risk of theft but the sooner the money is in the bank, the better it is for your business and your cash flow.

6. Complete Credit Control Regularly

Credit control is a vital function of bookkeeping so keep an eye on your debtors. Slow and late payments can harm your business and mess with your cash flow, so keep on top of your debtors. It is essential not to allow your clients to owe you money for long. To manage this; it is advisable to make sure no client orders any new goods or services until they have paid for the previous order. Follow up on late payments relentlessly. Cash flow is the key to business success so any action that minimises disruptions is essential.

7. Keep up to Date with Bookkeeping Duties

If you keep up to date with your bookkeeping duties on a daily or weekly basis, you will remain in control of your business finances and foresee any problems which may be on the horizon. It is important to reconcile your bank accounts regularly.

For the business owner, it is essential to review your accounts weekly to pay any overdue supplier invoices, tax payments and chase unpaid invoices. You will be able to better manage your cash flow by getting to know your weekly expenses and being informed of current invoices. You will also be able to monitor and evaluate the weekly income and expenses incurred by the business. You will also see any areas where there is over-expenditure and be able to watch any problems with late payments. Producing a cash flow forecast will assist in this.

8. Bookkeeping Tips – Forward Planning

For Small businesses, forward planning is an essential part of bookkeeping, as it is mandatory to make provisions for all taxes due to authorities. Setting aside money, preferably in a separate bank account, ensures you always have funds available for these critical bills. This forward planning will cut down on your stress levels of trying to find the money when these payments fall due. Your accounting software will assist in keeping track of when payments are due and alert you a week or two in advance of the due date for you to prepare.

Preparing a business cash flow forecast will help avoid a cash flow crisis, as you will see when the business has the funds available.

9. Use Accounting Software

A vital bookkeeping tip is to obtain simple cloud-based bookkeeping software that meets your business needs. It ensures your information is safely stored in the cloud, and you have access to your financial status at any time. Banking online and syncing your bookkeeping software with your bank account ensures your books are always up to date. Time tracking software will enable you to monitor your employees’ hours of work and will automatically calculate overtime, holiday pay, etc. This time tracking works with your bookkeeping software greatly simplifying your payroll.

A Small business bookkeeping system makes it much easier to keep track of business expenses. Most of the packages include an easy to use dashboard where you can list some of the expense accounts you wish to keep track of.

10. Outsource your Bookkeeping if you Need to

Running a business is a lot of work. Not only do you have to keep track of your inventory and sales, but you also have to handle your finances. For many business owners, bookkeeping can be a time-consuming and daunting task. If you don’t have the knowledge or the time to handle your business bookkeeping, consider outsourcing this task to a professional.

A bookkeeper can help you stay organised and ensure that your financial records are accurate. This can free up your time so that you can focus on other aspects of running your business. In addition, a bookkeeper can offer valuable insights into your business finances. With their help, you can make informed decisions about where to allocate your resources. So if you’re feeling overwhelmed by your business outsourcing your bookkeeping might be the answer.

Conclusion to Small Business Bookkeeping Tips

Small business bookkeeping is the heart of your business. Businesses that follow good bookkeeping practices are well-governed and financial information is readily available for accurate decision making. By following these bookkeeping tips, you will boost your business’s chance of enjoying financial success. Automate wherever possible and ask your accountant for advice on which system would suit your business best, thereby ensuring that your Annual Financial Statements are timeous and accurate, giving confidence to investors and shareholders alike. 

For more information on maintaining your accounts check the HMRC website. You can also read our bookkeeping basics section.