Small business owners spend, on average, up to 10 hours each week recording, organising, and processing their financial transactions – everything from accounts receivable and payable, to employee payments, expense receipts and supplier invoices.
While the process may be both time-consuming and tedious, effective bookkeeping is the foundation of sound financial management.
Are you feeling overwhelmed by mountains of paperwork and complex calculations? Here are three bookkeeping basics to ensure a successful financial future for your business.
Faithfully track expenses
In order to claim tax deductions and lower your overall tax bill, Consistent and accurate expense tracking is crucial. Plus, analysing expenses may offer crucial insights into your spending patterns and the overall profitability of your business.
For consistent expense tracking, business owners should look at using a mobile app. Options such as Expensify and Receipt Bank replace manual data entry with automated functions, including:
- Receipt data capture via your smartphone’s camera, therefore eliminating the need to hold onto paper receipts, which can get lost or misfiled);
- Tracking mileage of business travel via your phone’s GPS to; and
- Importing bank and credit card data, plus integration with accounting software.
Systematic invoicing and filing
Efficient invoicing is about more than ensuring you are paid on time. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid any errors whilst completing your bookkeeping.
Here are a few tips for professional invoicing:
- Make sure every invoice includes all the important details: contact information, a detailed list of products or services rendered, tracking number, and a breakdown of the total amount due;
- Provide electronic receipts to reduce waste and create a “paper trail” if there’s ever a dispute; and
- Maintain an invoice-filing system that records all important information such as when the invoice was sent, to whom, when payment was made, and any reminders sent out.
An efficient backup filing system can be achieved when an online invoicing tool can streamline this aspect of your bookkeeping process.
Save time with accounting software
Every business is required to keep organised and timely financial documentation, as mandated by law. However, manually posting income and expenses to ledgers and journals is very time consuming – not to mention stressful fairly stressful.
Using an all-in-one accounting software solution like Xero , QuickBooks, ClearBooks or KashFlow, will allow you to minimise the time (and stress) spent on your weekly bookkeeping.
There are numerous advantages to online bookkeeping, including:
- Instant reports and real time insights on profits and loss, customer accounts, payroll – and your overall financial “big picture”;
- Simplified data entry so you can collate and print invoices, purchase orders, and payroll much faster than with manual methods; and
- Improved accuracy through automation (once data is entered, the software handles all subsequent calculations and processes – including invoicing).
When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long term profitability of your small business. Therefore be sure to set aside time each day, week, and month to update and review your books to catch any inaccuracies and ensure your finances remain on track.