5 Best Bookkeeping Practices for Startups and Small Businesses
Small-business owners know that smart money management is one of the most crucial aspects of success, regardless of how much revenue a company brings in. How you keep your books can make or break your business, because those records are the only true representation of your profits and losses.
As you establish the financial side of your business, here are five best practices to keep in mind when creating a functional bookkeeping system.
1. Separate your personal and business expenses
Co-mingling expenses and income is a common mistake in small business bookkeeping—and one that will cause huge headaches for your business in the future. Open a business bank account as soon as you decide to go through with your startup, and get a separate business credit card. This not only separates your accounts but also helps your business build its own credit rating.
2. Automate whatever you can
Entering data into spreadsheets and reconciling numbers manually is so old school. Use cloud-based bookkeeping software, and do your business banking online. That way, you can sync your bookkeeping software with your business bank account so you always have accurate, up-to-the-minute records. Plus, with the cloud, your critical financial data is backed up safely off-site.
3. Keep records of business expenses
For anything you think you’ll be claiming, maintain detailed records; save time by scanning and digitizing receipts. You can also simplify expense tracking by always using a business credit card for business purchases.
4. Stay on top of tax deadlines
To avoid getting caught short, plan ahead and set aside money for any anticipated tax bills. Pay on time so you don’t face fines. Our website’s tax calendar for businesses can sync with your own cloud-based calendar so you never miss a deadline; it can even send you reminders a week or two before a payment is due.
5. Budget for major expenses and set financial goals
You may be well equipped on a day-to-day basis. But what if you need to come up with a down payment for an office or need to purchase new equipment and software to help you build your business? Planning for major expenses can help you best utilize the business credit and resources available to you while giving you peace of mind.
Similarly, an accurate representation of your current bookkeeping will allow you to forecast realistic financial goals for your business to hit over the next quarter or year.
