Maintaining good bookkeeping practices is the gold standard for all small businesses, and is the clearest way to show your business’ performance from years prior and where you stand currently. However, following through with regular upkeep of your records isn’t always an easy reality. Let’s discuss why it is so important to your small business and some tips on how to stay on top of it!
Why It’s Important
The key to any successful business is organization. It is not just yourself that your business records are of concern to. The IRS, investors, lenders, employees and customers all have an interest in one way or another. If you are unable to quickly procure requested information to one of these parties in a timely manner, the repercussions could be legal based or even just relational. All in all, good organization benefits everyone.
As stated above, good bookkeeping is the most efficient way to record past business performance which aids in creating future budgets. Without accurate records to work off of, you could risk creating a budget that doesn’t fit your growth plan.
> Prepared for Tax Season
A last second rush to organize your books before tax season adds unnecessary personal strain to an already stressful time. Not to mention the ever present fear of an audit, as disorderly records are of no help to you if the IRS comes knocking. But, using an organization system that works best for you, and staying on top of it will ensure that your finances are orderly and ready to go.
> Managing Cash Flow
Having a clear idea of the flow of cash in and out of your business is crucial for managing your finances. Without a strong cash management system, it can be hard to create a realistic profit growth plan.
How to Keep Your Books Tidy
> Have a Separate Business Account
When starting your small business it may have seemed convenient to have your personal and business banking account as one and the same. For the sake of avoiding confusion, your business should have its own account that can be referenced to for all financial records.
> Daily & Monthly Check Ins
To prevent bookkeeping from seeming like such a chore, create a schedule that carves out a small amount of time for you to record daily cash flow, receipts, receivables, business deductions or any other notable daily transactions. Then, find a day each month to sit down and check in on your accounts. With the small, daily efforts you have already made to upkeep your books, this monthly review should be more of a chance to double check your work.
> Hire a Tax Professional
The most effective way to create and maintain a good bookkeeping system without wanting to tear your hair out is by hiring a tax professional to do it for you. At Tax Savvy Jessica, we work with our clients to customize their bookkeeping methods to match their needs. Contact us today to see how we can get you on the path to easier bookkeeping maintenance!