When you run any type of business, ensuring that your books are accurate is an essential part of your day to day operations. Every incoming and outgoing payment will need to be documented for everything from business loans and staff payments to tax outgoings to ensure your business runs smoothly and profitably. Bookkeeping is the practice of recording every receipt, payment and invoice that comes through your business and being able to manage your accounts yourself when you run a small business is a good way to save money to help you to grow it.
There are lots of dos and don’ts when it comes to accurate bookkeeping and below are a few of the most important to take into consideration:
- DO set up business bank accounts
It is important to ensure that you keep your business bank accounts and records separate to your personal banking information, in order to make sure you can clearly keep track of your business accounts.
- DO your bookkeeping on a weekly basis
This is especially important when you first start up your business. Reliable online accounting software will help you to ensure that you document every payment that comes in and out of the business. The more you understand about where your money is being spent, the easier you will find it to manage and keep your costs down.
- DON’T use designated money for other purposes
If you set aside money to use to pay your taxes, mortgage or staff, never get tempted to re-designate this money to pay for another outgoing in your company, such as the rent on your building or to buy new stock. This will help you to manage your business finances with more accuracy and to avoid mix-ups or lost records.
- DON’T rely solely on handshake agreements
Whenever money changes hands, don’t ever rely solely on a handshake agreement – even if you know the person you are dealing with well. Ensure that there is a signed document to acknowledge the payment whether you are making a purchase or a sale to help you to keep track of the deal.
There are lots of dos and don’ts when it comes to bookkeeping from using reliable software and tracking your inventory to never handing over the cash projections to anyone else so that you always know that liquidity of your business.
Now that you understand the basic dos and don’ts when keeping your own financial records, are there any other tips that you would like to share or is there anything that you would do differently?