Achieving business success does not rely solely on doing everything well. It also requires that you do certain things not as good. The best bookkeeping practices for small and medium-sized businesses, which we present in this article, are a set of guidelines designed to ensure your financial health while helping you achieve business success.
1. Stay organized
The first bookkeeping best practice is to keep your expenses organized and categorized in a way that makes sense for your business. Ideally, you will have one credit card and one checking account for your business, so all transactions are in one place. If you use multiple cards or accounts, remember to transfer payments made from these other cards and accounts into your main business transaction accounts.
2. Have a system
As the owner or manager of a small or medium-sized business, it is important to have some sort of system for categorizing expenses. You do not need to keep track of every single expense but having categories like rent, marketing, supplies, sundry creditors and salaries can help you see where most of your money is being spent.
3. Review frequently
Another bookkeeping best practice is to review your financials regularly. This will help you make sure that every expense has been entered, categorized and closed properly. It will also give you an idea of how much money your company has available at any given time so you can accurately plan for future expenses.
4. Plan better
Set payroll deadlines at least two weeks in advance of actual paydays. Doing this will allow you to review payroll reports before they are sent to employees, spot any mistakes, confirm that everything is in order
5. Record Transactions Accurately
The first best practice is one of the most important. No matter how big or small your business, you need to accurately record every transaction that occurs. This may sound obvious, but it must be done promptly as well. You should reconcile bank accounts every month, which means making sure that what your “books” say (your accounting records) matches what your bank statement says. It would also help you to learn how to prepare a trial balance. See more. Only when you do this can you truly know what your financial position is.
6. Manage Cash Flow
The second best practice is related to the first—you must manage cash flow effectively. If you don’t, your business could suffer greatly. At the very least, you need to have a general idea of how much cash is coming in and out of your company regularly. It is also important to keep tabs on accounts receivable and accounts payable so that you know exactly which invoices are past due, who owes you money and when certain payments are due to suppliers and vendors.
7. Get online!
The use of physical books, folders and files are outdated. The paperless office has been a reality for quite some time now, especially when it comes to accounting and bookkeeping. By using cloud-based or web-based software and services such as Bookkeeper360’s online bookkeeping service, you can access your financial data from any device or location, whether you are at the office, on vacation or working from home.