Just mentioning the word bookkeeping to many small business owners causes cringing and an instant headache. Most small businesses push their bookkeeping to the back burner because they don't get any useful information from their bookkeeping. Bookkeeping isn't sexy to many small business owners so they categorize it as a non-essential task. However, at some point in your career you will need your bookkeeping. You may need updated books to file taxes, apply for a loan or apply for a grant. Once you go through the feeling of needing your bookkeeping but not being able to satisfy that need you will never neglect it again. Here are a few ways to take the headaches out of your small business bookkeeping for good.
Do It Yourself Or Get Help?
As far as I am concerned there are two options to get your bookkeeping done; do it yourself bookkeeping or outsourced bookkeeping. If you have some sort of accounting education and some relevant experience you may be able to tackle the bookkeeping yourself. If it has been a long time since Accounting 101 you may want to ask around your network to see how everyone else is handling their bookkeeping. While handling your own small business bookkeeping can save you money it can also cost you a lot of time. Additionally, if you don't know what you are doing and make mistakes it can be costly to fix those mistakes. Depending on your situation it may be more effective to use an outsourced bookkeeping service. Although an outsourced bookkeeper will cost you money it may actually save you money in the long run. You will be doing yourself a favor by hiring a bookkeeper to help you set up QuickBooks and your bookkeeping system correctly from the beginning. Maybe you can find a bookkeeping service that will offer QuickBooks training and support to help you learn to handle your own small business bookkeeping.
Get Books Current
The first step in taking the headache out of your bookkeeping process is to get your bookkeeping current. You can't take the stress out of your bookkeeping until it is actually caught up. This means you first need to enter all of your transactions into QuickBooks and then reconcile your QuickBooks accounts. It is very important to reconcile all of your applicable accounts, not just your bank accounts. Any account that you receive a statement for with a beginning and ending balance can be reconciled. You can reconcile bank accounts, credit cards, loans, lines of credit and even payroll liabilities. Reconciling your accounts is a huge step because it at least lets you and your CPA know that all of your transactions are in QuickBooks. Whether they are in the right account or not is a different story, but having a reconciled QuickBooks file is a huge step in the right direction.
Decide On Recurring Bookkeeping Tasks
Like many other business tasks setting up a bookkeeping process that is systematic and predictable is crucial. Developing a dialed bookkeeping system will definitely take the headaches out of your business finances. You want to set up a schedule for you reconciliations; whether it is daily, weekly or monthly reconciliations, that will be a big step. You also want to keep a tight handle on your accounts receivable and accounts payable. I also think that you need to take advantage of financial reporting no matter how small your business is. There are many reasons to keep your bookkeeping updated but financial reporting and analysis is definitely one of the main reasons. Running a small business without financial reporting is like operating blind. Create a bookkeeping system that you can use as a tool to help you make good business decisions.
Review Before Year-end
Year-end bookkeeping and taxes are other items that cause headaches for small business owners. Too many business owners wait until after year-end has passed to address their bookkeeping and taxes. Once year-end has passed you are very limited as to what you can do to affect your bookkeeping and taxes. Additionally if you wait until your close to the tax deadline to find out your tax liability you may be in for a big surprise. One crucial step that you need to take is to update your bookkeeping and have a tax review with your CPA prior to year-end. There are a few major advantages to getting a tax liability estimate prior to year-end. First, you will know what your potential tax liability is. If you are going to owe a significant amount of money wouldn't you want as much advance notice as possible? Secondly, if you do need to make some last minute tax advantageous moves you have many more options prior to year-end rather than after.
Most small business owners find their bookkeeping to be a headache because they don't see value in it. Once your bookkeeping system is set up properly and updated regularly it can provide you with a lot of valuable information. Dial in your bookkeeping system, take the head ache out of it and get a business tool that you will learn to love.