Bookkeeping guidelines: 15 Things Every Small Business Needs to Know

Bookkeeping guidelines

Last Updated May 6, 2024

In the fast-paced world of small business, mastering the art of bookkeeping is crucial. Whether you’re a seasoned entrepreneur or just starting, keeping your financial house in order can mean the difference between success and failure. To help you navigate the complexities of bookkeeping, we’ve compiled a comprehensive list of 15 essential tips. From separating your personal and business finances to understanding income statements and balance sheets, these 15 bookkeeping guidelines will set you on the path to financial prosperity.

Keep Business and Personal Banking Separate:

It’s tempting to mix personal and business finances, but it can lead to a tangled mess come tax time. Open a separate business bank account and use it exclusively for business transactions.

Keep Track of Cash Payments:

Cash transactions are easy to forget, so it’s crucial to keep detailed records. Use a simple spreadsheet or accounting software to track every cash payment and reconcile it with your bank statements regularly.

Keep Your Receipts:

Receipts are the bread and butter of bookkeeping. They serve as proof of your business expenses and can be crucial during tax season. Keep them organized and easily accessible.

Automate Bookkeeping With My Count Solutions:

Bookkeeping doesn’t have to be a chore. Use accounting software like My Count Solutions to automate your invoicing, expense tracking, and financial reporting. It’s a game-changer for small business owners.

Prepare a Budget At Least Quarterly:

Budgeting is key to managing your finances effectively. Set aside time every quarter to review your budget and make adjustments as needed based on your business’s performance.

Understand the Income Statements and Balance Sheets:

Income statements and balance sheets are your financial roadmaps. They show you where your business stands financially and where it’s heading. Understanding them can help you make informed decisions about your business’s future.

Be Prepared for Large Expenses:

Running a business comes with unexpected costs. Set aside a portion of your revenue for emergencies, so you’re not caught off guard when a big expense comes your way.

Go Paperless With Cloud-Based Bookkeeping:

Say goodbye to piles of paperwork and hello to cloud-based bookkeeping. Cloud software allows you to access your financial data from anywhere, making it easier to manage your finances on the go.

Learn When It’s Time to Outsource:

As your business grows, so do your bookkeeping needs. Know when it’s time to outsource your bookkeeping to a professional to ensure accuracy and compliance with tax laws.

Know Your Operational Costs:

Understanding your operational costs is crucial for setting prices and managing your cash flow. Keep track of all your business expenses to determine your break-even point and profitability.

Keep Track of Accounts Receivable:

Late payments can put a strain on your cash flow. Keep a close eye on your accounts receivable and follow up with customers who are slow to pay to ensure a healthy cash flow.

Remember Your Tax Deadlines:

Missing tax deadlines can result in penalties and interest charges. Stay on top of your tax obligations by setting reminders and filing your taxes on time.

Schedule Bookkeeping Activities Into Your Regular Day:

Make bookkeeping a priority by scheduling it into your routine. Set aside dedicated time each week or month to update your financial records and review your finances.

Outsource Your Payroll:

Payroll can be complex and time-consuming. Consider outsourcing your payroll to a professional service provider to ensure accuracy and compliance with tax laws.

Send Invoices Within 48 Hours:

Prompt invoicing is key to getting paid on time. Send your invoices promptly, ideally within 48 hours of completing a job or delivering a product, to maintain a healthy cash flow.

Key Takeaways:

Effective bookkeeping is essential for small business success. By these 15 bookkeeping guidelines, you can streamline your bookkeeping process, maintain accurate financial records, and make informed decisions about your business’s future. Remember, good bookkeeping is not just about compliance—it’s about setting your business up for long-term success.