Accounting and bookkeeping: Sometimes they seem like just one more item on the never-ending to-do list. It’s easy to let such things slip off your list of top business priorities. However, if you don’t track your company spending, expenses and profits, you can’t very well expect to understand what you should do to steer your business toward success.
Too often, bookkeeping for small businesses involves the stressed-out owner carrying around a haphazard collection of notebooks and file folders, desperately trying to track everything while also managing the overall business and sweating to bring in new business, to boot! That kind of situation is a recipe for disaster – especially when tax time rolls around.
In such situations, bringing in an expert on bookkeeping for small businesses is a smart investment move. A financial business consultant can provide helpful tips on how you can create a consistent means of tracking the numbers. Alternatively, your consultant might recommend hiring outsourced bookkeeping services instead of trying to handle all of your books in house.
Here are a few go-to tips you can use today to improve your accounting and bookkeeping procedures:
Don’t try to manage the books all on your own, business owners. If your business is thriving, you probably don’t have the time to spend hours poring over bank statements, stacks of receipts and paid invoices. Instead, share some of these tasks with a trusted employee or two, or hire outsourced bookkeeping services to come into your office periodically and run accounting and bookkeeping procedures.
Early in the life of your business, it made sense to track your expenses, income and other numbers in ways that worked well for you. In other words, that stack of notebooks did come in handy when you weren’t handling many projects. However, sharing responsibility for your accounting (and thereby opening your schedule for more pressing leadership tasks) means you must find accounting techniques that anyone in your organization can understand.
One option is to choose a software program (such as Quickbooks) for your accounting and bookkeeping. Open source programs such as GnuCash can help you get started if you don’t want to spend any money on accounting software. Alternatively, if you have employees who often complete work offsite, a cloud-based solution could work well. Heck, even tracking expenses and income numbers on a shared Google doc is better than trying to keep all those numbers in your head. In the end, which program you choose matters less than whether that program is efficient and easy to use.
Once you’ve chosen a new system, spend some time training employees on how they should track the company numbers. If you’re not sure what you should be tracking, consult with a guru on bookkeeping for small businesses.
With all of that said, there are certain numbers that are simply easier to track on your own. Here are a couple of suggestions that can help with such situations:
Track mileage via a shared Google calendar. That way you and your employees will always be able to see how much you should be reimbursed.
Keep expense receipts in a weekly or monthly envelope. Tracking smaller expenses is all about having a consistent process that’s easy for you to remember. Consider taping an envelope in the back of your day timer or keeping a special envelope in your purse for your expense receipts.
Track hours worked in your day timer. Set aside one line of your day timer to track how much time you spend working each day. This technique will not only help you see what kind of profit you’re creating on an hourly basis, but it will also help you achieve a good work/life balance.
The beauty of bookkeeping for small businesses is that it can help owners understand how to see higher profits. Here are a few reports that you might choose to produce on a monthly basis in order to understand how to steer your business:
Bottom line: Reports help you see the big picture. Set internal deadlines for any reports you want produced regularly, and make it a point to follow up with your employees to see when the reports are done. Outsourced bookkeeping services can help you understand which reports you should produce.
Here are a few more business accounting tips to help you get your financial ducks in a row:
Look for local bookkeeping classes. For instance, here in Portland, Mercy Corps offers a $150 business basics class that includes accounting considerations for business success.
Seek out technological solutions that fit your lifestyle. If you’re a smart phone fan, for instance, you might look for apps that will help you track expenses while you’re on the go.
Accrual vs. cash-based systems. In general, there are two ways to track income and expenses while bookkeeping for small businesses. In cash-based systems, you track income and spend money when you have actual cash in hand. This makes sense for businesses that are just starting out. Larger businesses and those that take credit card payments use accrual systems instead; in the accrual approach, you track your income and expenses as each transaction occurs.
If all of this sounds too complex, outsourced bookkeeping services are the answer. Even a single day with an experienced bookkeeping professional can go a long way toward getting your accounting and bookkeeping straightened out and set on a path for future success.
Barb is the CEO of Fisher Bookkeeping, an outsourced bookkeeping consultancy that provides small businesses with a full-service financial department. Her favorite aspect of work is to break down the accounting to meaningful bits, so entrepreneurs can make a powerful difference in their own business. She's also a power lifter (squat: 215, DL: 270).