Bookkeeping For Small Businesses
Online bookkeeping is one of the most important yet most overlooked aspects of a business. You don't get enough time to do your books in a day because you have other crucial tasks to perform. No matter how much you ignore it. It still will remain one of the most important jobs without which the entire business may collapse.
Properly managed books can do wonders for your business. They can provide you the information you might want to treasure, which would impact your business's growth.
This article will be all about how good bookkeeping can be a crucial factor for your business to grow.
1. Manage your time better
A good bookkeeping assistant looks for new opportunities, specifically if you are new to the world of business. You will always have your budget ready with you.
2. Receive unexpected refunds for your expenses
You have a different level of control and security when you own a business. Business ownership comes with some specific perks. As the proprietor, you can write off your travel expenses, phone utilities, and internet billing when the tax season arrives. But you are least likely to benefit from this if you have got your personal and business expenses merged. For some people, business credit cards are next to their lifelines.
3. Aware of the constraints
Being audited is tense, but you know what is even worse? Having personal and professional spending's merged or the records to support your allegations are absent. Therefore, you can not identify the source of your losses.
4. Makes it easier to avail loans
Sole proprietors are sole profit gainers and solely responsible for any losses that occur, and they generally do not have appropriately maintained books,
They might lose their assets as collateral damage, such as their house or vehicle, etc. therefore, the banks and other lenders get hesitant to lend money to the sole proprietors and freelancers.
5. Make decisions with a proper perspective
Having organized transactions and detailed financial reports can save you from fatal decisions. Recognizing where your profits and expenses recline, you get a better insight into your business's financial health.
Even though it is not as stressful as it is perceived, you can consider using accounting software. If, just like other freelancers and sole proprietors, you too have a considerable amount of work.
How Does Poor Bookkeeping Impact Your Business?
Poor Bookkeeping can cause you more damage than you think, not just it would impact your business's decision making, but also it could engage you in some legal issues. Let us discuss the negative impacts bookkeeping can show on your business.
Issues with credit
One of the worst impacts of poor Bookkeeping is credit issues; it influences how one organizes its business. You may end up delaying your debts, hence causing higher interest rates, fewer payment terms, loss of credit, and interference with your credit score. However, good Bookkeeping can prevent all of this.
A decrease in the sales and profit curve
Poor management of books can lead to a loss of suitable suppliers, resulting in the loss of good supplies; Your customers will then start looking for supplies elsewhere, causing a decrease in your sales and profit curve.
Apart from the customer feedback, customer relationship and impactful customer management are the keys in dictators of your business's performance.
An increased number of chicken-shit customers, diminished payments, and increased churn rate can tell a lot about your business's position in the market. However, with good Bookkeeping, this can all be prevented. You can prefer outsourced bookkeeping services.
Poor Bookkeeping impacts not only your business's growth but also the legalities, specifically where delayed tax filing and improper deductions are involved. Furthermore, your inability to repay your debts can cause you to be legally pursued. Hire a bookkeeper with sufficient knowledge for good bookkeeping services; you can connect to the experts regarding this topic.
With poor Bookkeeping in play, the probability of missing out on opportunities to expand your business increases, and you might not as well get loans with a perception of not having enough funds in your bank.
Irrelevant decision making
Good Bookkeeping gives you relevant information on your departments, distribution channels, products, and overall performance of your organization so that you could make decisions pertinent to this information. Improperly maintained books can have a reversed impact on your decision making; irrelevant information can lead to conflicting results after a particular decision.
Tips To Maintain Your Books Better
We have already discussed the impacts of good and lousy Bookkeeping and why it is essential to maintain them properly. We will share the particular changes that a proprietor must implement to change their bookkeeping pattern.
Separate personal from business expenses.
The first modification that the proprietor needs to make is using credit cards for either personal or business use. Personal and business expenses get merged when both are recorded in the same accounting software, leading to issues with categorizing business and private transactions. If this is the case with you, you can open a new bank account for your business transactions.
One of the easiest and apparent tips for maintaining books is to execute bank reconciliation of the revenue, expenditures, and other related transactions frequently; this will help keep healthy books.
Monitor accounts receivables from the clients
Under both sales categories, business owners who process under accrual accounting have to focus more on the money receivable transactions, including debt recovery.
Switch to cloud accounting software
Cloud accounting software can guarantee you real-time updates via your browser or mobile apps.
Supervise every Slow-Moving inventory
It is vital to supervise each slow-moving goods as they can cause accounting issues within books due to expiry or damages. Business people are obligated to physically account for their stocks and document the results in their cloud accounting software.
Online banking is a good option
You can run a different bank account with your business name. Make sure the bank facilitates online banking options so you could access important data instantly.
Maintain petty cash records
Many business people don’t consider petty cash important; they consider it small in value. However the reality seems different, not maintaining a proper petty cash account may lead to frauds. One must maintain the petty cash account properly, to maintain a healthy bookkeeping.
Minimize cash expenses as much as you can
Making cash expenses can lead to several falls including audit trail, subordinate recording for accounting, transition in the liquid cash theft etc. instead, use cheque books, credit cards, debit cards and similar mediums to make payments and tracking the transactions.
Since we have discussed various aspects of having poor and good bookkeeping, you might have understood why it is important to maintain it properly, we have also shared a few tips to maintain healthy books which would further lead to structure your business better and help it expand.