Small business owners wear lots of hats. You’re a marketer, a creator, a production assistant, a salesman, and you’re also in charge of bookkeeping. Bookkeeping may not be the most exciting aspect of your business, but it’s pretty important. If you’re looking to learn how to up your game, you’ll find 4 habits below that will help you increase your bookkeeping skills and help you see your business grow.
Habit No. 1 – Work on Your Books on the Same Day, Time, & Place
It’s sage advice when it comes to creating habit, consistency is key. We’ve found that the most practical advice we can give when it comes to staying on top of your finances is to be consistent in overseeing them. We get that it might not be fun (although as accountants we might beg to differ) but getting into your financial on a regular basis will turn results faster than anything else. Depending on how much financial activity is happening, you may be able to go longer, but on average most small businesses should be working on their books weekly.
Set aside a specific day, time, and even place for reviewing your finances and making your books current. Sometimes that means coming in early or staying late at the office, or maybe you take your books with you to a favorite lunch spot or cafe. No matter what, start looking at this appointment as a moment where you can get a realistic snapshot of how your business is doing rather than just another hour where you’re forced to crunch the numbers.
Habit No. 2 – Put all your Receipts (& Other Financial Stuff) in One Place
This habit is probably a no brainer, but you’d be surprised how often we hear new clients tell us that they’ll have to “look into that”. When we hear that phrase, we know that it probably means they’ll be searching around their office, digging in their filing cabinet, or scrolling through their inbox trying to drum up whatever invoices, paperwork, or receipts we’ve requested.
Putting all your receipts, invoices, & other financial records in one spot makes life easy. If organization is your thing, you might even try color coding the different paperwork types with folders, tabs in your inbox, or even the good old sticky note.
Habit No.3 – Record & Categorize Transactions Each Week
It’s not just enough to open up your files and review your cash flow. We get that the most tedious part of the job is recording and categorizing transactions, but it’s what will show you where your money is going and that’s what makes your business tick. Keep a folder if you’re got physical papers from transactions or merely note in your book the week you’re recording and then reference where the receipt or invoice can be accessed fi you’re working online.
Once it’s logged, don’t toss it just yet. Keep all paper work, both physical and digital in an easy to access, and labeled, location. You’ll need it come tax time and will want to hang on to it even longer so that you have it on hand in case you’re audited by the IRS.
Habit No. 4 – Review Invoices & Expenses
You’ve logged. You’ve categorized. You’ve looked at the cash flow. But now it’s time to put a little elbow grease into creating a strategy. If you’re new to bookkeeping you’ll spend the first few months just looking at what categories seem to have the highest expenses and which seem to bring in the most cash. Once you’ve got a handle on that, it’s time to start forecasting a bit. Review your invoices and future expenses. Are there months where you can push more sales? Can you last longer without ordering more supplies? The answers to these questions and more come through reviewing your invoices and expenses. So start looking at your books like you’re having a brainstorming session for growing your business. Then you can look to see if your new ideas are working in the months to come!
What other tips or habits do you find useful when it comes to bookkeeping for your small business? We’d love to hear them in the comments.
FAQs for Small Business Bookkeeping Habits
1. Why is consistency important in bookkeeping? Consistency in overseeing finances yields faster results. Set a dedicated day, time, and place weekly to review your finances for a realistic business snapshot.
2. How can I streamline receipt and paperwork organization? Centralize all receipts and financial records in one spot, employing folders, color-coding, or digital tabs for easy access and organization.
3. Why is recording and categorizing transactions crucial? Recording and categorizing show where money goes, vital for business. Maintain a folder for physical papers or note details for digital records, essential for taxes and audits.
4. What’s the significance of reviewing invoices and expenses? Beyond logging and categorizing, analyzing expenses helps strategize. Evaluate high expenses, profitable categories, and forecast future cash flows for business growth strategies.
5. Any additional bookkeeping tips for small businesses? Share your useful bookkeeping tips or habits in the comments to foster a discussion on effective small business financial management.