If you ask any small business owner about how their business is doing, many will respond: “Well, I can always use more customers/sales/visitors/traffic.” So if someone asked you what’s the greatest concern of small businesses, you would likely say those same answers.
The Bookkeeping Balance
As many business owners struggle to maintain balance in the midst of a hectic schedule, needy clients, meetings, not to mention their personal lives, bookkeeping tasks often are neglected with the I’ll do it later’ mentality.
Accurate bookkeeping can mean the difference between staying in business or running out of steam due to cash flow problems or tax troubles. If you find yourself falling behind in your bookkeeping tasks, it’s time to clean things up before your business becomes messy and confusing.
Not tracking expenses could put you in the position of having a great deal of potential revenue but little actual money coming in. Without a way to manage all outstanding invoices at once and monitor which of your clients still owes you money, you run the risk of losing income from existing accounts.
The best way to avoid having invoices that sit for too long is to use invoicing software that sends automatic reminders to customers as the due dates approach. We use QuickBooks and Freshbooks. If you don’t want the cost of these programs at the beginning, Wave is a good, free option.
Small purchases, recurring payments, hidden fees, and interest charges add up fast. Failing to keep track of these “extra” expenses can result in a large discrepancy between the money you think you have and the actual funds available to use for your business. Many business owners also forget to track small purchases made with cash.
Messy books don’t provide an accurate record of the business expenses that you can claim on your annual tax return. That could mean losing out on many deductions and paying much more than you have to.
The government isn’t going to go through your return for you and point out where you could have done better, so it’s your responsibility to log every expense relating to business operations and list them all come tax time. Keep your personal and business transactions separate, and make sure to hold on to receipts to validate your purchases.
Wasting Valuable Time
When you don’t make clean bookkeeping a priority, you wind up having to scramble to catch up every time you need completed books for a financial transaction. The more you have to rush, the more likely you are to make mistakes that require more time and energy to correct.
The time lost costs your business much more than taking a few minutes each day to fill out the transactions for the day. You can also start your day taking care of the previous day’s transactions.
Avoiding Bookkeeping Issues and Errors
Running a small business is complicated enough without the stress of dealing with regular bookkeeping and accounting tasks. Hiring an experienced bookkeeper takes the burden off you and decreases the chances of having problems with the money available to you in your business.
Keeping organized files and records from the start makes balancing your books at the end of each month, quarter and tax year much simpler and less stressful. With a clear picture of income, expenses, profits, and cash flow, you can run your business knowing that you have enough money to support daily needs and drive long-term growth.