We all know maintaining day-to-day bookkeeping is one of the essential activities to handle the cash flow in our business and control the expenses, especially when you’re the owner of small-scale business, you should do your bookkeeping to track your daily transactions.
Here we discuss the top five essential bookkeeping tips needed for small business owners to increase their business revenue. Adopting a few fundamental habits given below will help you to keep bookkeeping easier, avoid errors, and monitor your business expenses effortlessly so that you can budget better. These methods have been implementing mostly in all Accounting outsourcing companies in India.
Setup Separate bank accounts for Personal and Business finances.
Be sure not to intertwine your personal and business funds to avoid tax time nightmares, wasting hours to examine your expenses, limited audit trail, or missed deductions.Even if you run a small-scale business or part-time business, it is always advisable to have a separate business bank account and business credit card to manage your finance. It will simplify your bookkeeping and also help your business to reach its metric.
Considering the spending on opening a business account, many avoid it. However, the advantages of your business will be far higher than the expense of not starting a business account. Also, a business account will have benefits like partly tax-deductible as an expense along with a clear picture of your business earning, spending, and what your bottom-line net profit will be.
Maintain a proper bookkeeping system
You can either do it manually, like entering with excel or use accounting software like QuickBooksandXero. Maintaining data with the help of spreadsheets manually is an old school method; still, it would be the most comfortable and cheapest way in case your business is a small one, and you end up with a minimum number of monthly transactions. Once it grows, you can use dedicated software or cloud-based software to keep up your data accurate and up to the minute. It also helps you to back up your financial data.
Keep Money aside for tax:
It’s mandatory for every business person, regardless of small-scale business or start-ups, to pay taxes to the government without exceeding the given deadlines. Otherwise you will have to pay extra late fee penalties and interest. To avoid this situation, develop a habit of putting money aside for taxes while you bookkeeping your business finances. You can also utilize the IRS website’s tax calendar to notify the pay cycle in advance.
Pay attention to due invoices
Mostly small-scale business owners will choose credit-based deals to establish their visibility, quality, and attract more customers. In that case, keeping a close eye on your unpaid accounts’ receivable is very important. When customers do not pay on time, every late payment will hurt your business cash flow and affect your procurement process. You can use late fee charges and notify them again over a given deadline or issue a second invoice.
Track with Single or Double entry method:
The essential thing in every business operation is to keep track of all your deposits and expenses so you can choose either a single-entry accounting system or a double-entry accounting system. Double entry, consisting of double records (Credit and debit), helps you to monitor where your money comes from, as your deposits or profit, and where it’s going. Single entry methods can be used when your business is simple individual proprietorship with no inventory and more employees; here we record transactions once as they happen.
And this is how we act as the best outsourcing firm even for US tax filing companies in India.
Do you have some more interesting tips? Let us know in the comments.