5 easy ways to keep your small business finances organised
It might come as a surprise (and a big relief) to hear that some of the most common bookkeeping mistakes for small businesses are also the easiest to fix.
Apart from using the right accounting method for your business, there are a few basic things you need to know.
If done properly these five tips will not only help you keep your business on track financially, they’ll actually help you grow your business.
1. Keep daily records
This is one of the most common yet often most overlooked rules of small business bookkeeping. If you don’t keep accurate daily records, you wont be able to track the financial condition of your business. It’s a small thing but can make such a huge difference over time.
There are many different record-keeping systems, it doesn’t really matter which one you use, as long as you have one, and you use it everyday.
Once you have a good system in place it’ll only take a few minutes each day and you’ll be on top of your finances when it comes to things like preparing monthly, quarterly and year’s end paperwork. Not only will you be organised, it could save you untold financial and/or legal hassles down the track.
2. Handle and review bank cheques carefully
It can be easy to become complacent when writing cheques and filing canceled ones into a draw without reviewing them first. But those cheques are as good as cash and if something goes wrong, you, not the bank, will be responsible. Be as careful with cheques as you would be with cash.
Sign cheques using a clear, distinctive signature that’s hard to forge. Review canceled cheques before anyone else sees them, including your employees, to ensure you catch any unauthorised cheques. And if your business is a partnership, it’s a good idea to have at least one of the partners co-sign the cheques.
3. Get a bank statement with a month-end cutoff
This is another really simple tip that can reap big rewards down the track. Synchronizing your bank statement with other monthly records will make it much easier to reconcile your statement and track expenses.
4. Leave an audit trail
Your record keeping will be a lot more effective if you have a system that allows you to quickly and easily retrace your company’s financial activities. This means keeping your invoices and cheques in numeric order, not skipping cheques or invoice numbers, and keeping separate bank accounts for your business and personal funds. If you can’t go back a year and reconstruct your company’s finances, you probably aren’t leaving an effective audit trail.
5. Computer bookkeeping
The right software is absolutely essential for all but the smallest businesses. There are different types of applications to choose from depending on which one is right for your business needs. We love and recommend Xero because it’s so easy to use.
The right accounting software makes it easy to track income and expenses, prepare tax documents, summarise your company’s financial activities and back up records for safekeeping.
If you need help getting your books in order give us a call, we can talk you through your best options, give you some training, install new accounting software, or simply do it all for you.
Call us for a free bookkeeping analysis today on 1300 900 938 or email us here.