Starting your small business can be exciting between entering new markets and finding alternative customer bases. Opening your small business does come with the not-so-fun stuff too: bookkeeping. Maintaining an effective bookkeeping function takes due diligence and constant attention, some of which can be accomplished by focusing on cash flow, investing in software, reviewing financial reports, and consulting with an expert.
Focus on Cash Flow
The first tip to ensuring your bookkeeping function is operating in top-notch condition is to focus on cash flow. Cash flow looks at the money flowing in and out of your company. Ideally, you want to be sure your business has a steady stream of cash flowing into the business to cover upcoming obligations and purchases. Any lags in your cash stream may cause you to default on payments to employees and vendors, creating issues within your business. Consistently review your deposit schedules and upcoming payments to generate transparency in your financials.
Invest in a Software
Software programs can help your small business gain control over your bookkeeping function. Most software programs give businesses the opportunity to connect bank and credit card accounts, taking a major data entry burden off your plate. Additionally, monthly reconciliations are a key component of bookkeeping procedures that should be completed regularly. A software program allows for simple reconciliations, giving you control over which transactions have cleared and which are still outstanding. Greater transparency into your accounting function leads to business prosperity and growth.
Review Financial Reports
Another bookkeeping tip that you should implement is a consistent review of financial reports. These reports generate critical financial data, such as the amounts customers still owe you. At a minimum, you should review the income statement and balance sheet monthly. The income statement tells you how profitable your business is for a certain time period while the balance sheet tracks your assets and liabilities. Other financial reports, including accounts payable aging and accounts receivable aging should be reviewed more frequently to track money coming in and going out.
Consult an Expert
When you are struggling to maintain your business’s bookkeeping, consult an expert. Having an expert opinion, such as by Online Accountant, gives you expanded resources to find areas of weakness and develop strategies for viable change. Moreover, a qualified accountant can take the bookkeeping burden off your plate completely, giving you the time needed to focus on other areas of your business. Additionally, an accountant can ensure the data going into your accounting system is good, creating strong and accurate financial statements as a result.
Small business bookkeeping is an area that many business owners struggle to not only understand but to also effectively maintain. Focusing on cash flow, investing in software, reviewing financial reports, and consulting an expert are four ways to begin gaining control over your bookkeeping. However, there are solutions if you determine handling your own bookkeeping is not ideal for you. Outsourcing your bookkeeping to Online Accountant is a viable solution for many business owners who feel overwhelmed maintaining their own financial records. For more information, reach out to a team member today.