Top 10 Ways 10. Separate your business and personal finances. Many new business owners, and especially sole proprietors, fail to set up...
Top 10 Ways
10. Separate your business and personal finances. Many new business owners, and especially sole proprietors, fail to set up separate banking, bookkeeping and other systems to keep track of their businesses, causing confusion and potential tax headaches. Using money from your business to pay for personal expenses, for example, can get you in legal hot water, and at a minimum complicates your recordkeeping.
9. Reconcile. No, I'm not talking about making up with a spouse you've neglected due to business demands. Rather, review your bank statements and balance your accounts regularly. Don't just toss statements into a stack. If you let days or weeks pass without updating records, you'll soon be lost and errors may go unnoticed.
8. Don't delay; do it daily. If your business finances change daily, you should have bookkeeping systems that update daily as well. This should include daily sales, purchases and other transactions, and especially any cash transactions.
7. Hire a bookkeeper. You don't need to pay an accountant's higher professional fees to handle routine bookkeeping chores. Many small businesses have part-time bookkeepers to help keep things in order. The American Institute of Professional Bookkeepers offers helpful information on how to evaluate a bookkeeper before you hire one. Visit http://www.aipb.org/ and click on "For Employers: Free Bookkeepers Hiring Test." Or consider an outsourced solution that combines online convenience with professional accounting and bookkeeping services. BalanceYourBooks.com is one such choice.
6. Use calendar month timing. Most business owners find it helpful to account for money on a calendar month basis. But things don't always line up. For example, if your bank statement isn't based on a calendar month, ask for it to be changed. Most banks can make that accommodation.
5. Be pro-active with your accountant. One reason you need to keep good books is so you can provide accurate and timely information to an accountant to prepare your business taxes. Get their advice on how best to set up your books and organize your financial information. You might also ask them to periodically check your books, adjust entries or prepare financial reports for your review.
4. Use a payroll service if you have employees. Once your business has employees, your finances take a quantum leap in complexity. Outsourcing to a payroll service such as Paychex, Sure Payroll or ADP places the recordkeeping burden on them, and makes your end vastly easier.
3. Keep it simple and consistent. Bookkeeping is all about columns, and by keeping the same column headings all the time, you will avoid the frustration of mismatches. And if you avoid over-categorizing income and expenses, you'll also save yourself time. Often it's just not necessary to break things down into great detail.
2. Automate your invoicing. Online billing services that can effortlessly issue your invoices and keep track of everything are one of the most helpful web-based small business services to appear recently. Check 'em out, and put 'em to work for your business. Look at Bill.com and FreshBooks.com in particular. The services are cheap and can help clean up a billing mess in an instant.
1. Get the right software. Don't even think about keeping your books manually or with spreadsheets. Low-cost, easy-to-use financial software for small business such as QuickBooks, or the free version QuickBooks Simple Start (both at www.intuit.com) are perfect for keeping everything in order. New web-based solutions such as Netbooks (www.netbooks.com) are also great.