Keeping Your Financial House in Order
Many small business owners would rather do almost anything than spend time keeping the books, preparing invoices or dealing with other financial and tax issues. It’s tempting to focus on the more exciting and seemingly beneficial things such as digital marketing, networking with colleagues, building a social media presence and simply selling.
But tending to financial basics is critical to keeping a small business of almost any size or kind on track. Here are seven things that can help get (and keep) your financial house in order:
1) Use a web-based bookkeeping service. Don’t even think about trying to manage your business books and finances manually. Easy-to-use bookkeeping services for small business are available online at a low cost. The leader, of course, is QuickBooks, which offers several different online versions that can help you keep your books, but also run your entire business. You can track your sales and expenses, get paid faster and even run payroll with it.
The lower-cost version, called QuickBooks Online Essentials, does everything most small businesses need and starts at about $27 per month, or $66 per month with payroll. The “Plus” version adds more features and starts at $40 per month ($79 with payroll). Visit QuickBooks.com.
WorkingPoint.com is a more budget-minded end-to-end solution that integrates tools for small business accounting, online invoicing and other needs. The light version is just $9 per month ($99 yearly) and the full featured solution costs $19 per month ($190 yearly). All plans come with a 30 day free trial.
2) Take your billing and invoicing online, too. If you have bookkeeping covered, your business can still benefit from online 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 available.
Freshbooks.com, for example, has hundreds of thousands of users. Its core service lets you send and manage invoices and collect payments online, although it also offers cloud based accounting. You can brand your system and invoices with your company’s logo.
Sage One is a simple online accounting and invoicing solution designed for small business (www.sageone.com). By managing your invoicing with Sage One you can also provide customers with a convenient way to pay you online by credit card or PayPal. This can help you avoid worrying about invoices piling up or late payments slipping through the cracks. You can get alerts when a payment is late and resend an invoice with a few mouse clicks.
3) 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.
4) 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.
5) 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.
7) 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.
8) 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.
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