5 Bookkeeping Habits Every Entrepreneur Should Practice
Poorly tracked finances can be a nightmare for a small businesses and can put your future at a great risk. Good bookkeeping, on the other hand, can make your business thrive instead of just survive. Here are a few pointers on how to guide your business to success:
1.Prepare your taxes with a professional
As a business owner, you are splitting your attentions between so many things and it makes sense to outsource the work you are not qualified to do. After all, you opened your business to follow your passion, and not to crunch numbers at the end of the year. Accountants do much more than just prepare your tax return. They are trained to look at your finances as a whole and spot a prefect time to expand, buy property etc. Their guidance is essential for making the right decision at the right time.
2.Use The Hands On Approach
Just because you are having someone else handle your books does not mean you should not be a part of the process. Schedule quarterly meetings to go over the reports and see for yourself if things need to change and where your business stands. It is very important for you to see and understand the numbers, profit and your accounts receivable vs payable. The 5 most important numbers to look at are:
- Accounts Receivable
- Accounts Payable
- Profit Breakdown per Customer
3.Find The Right Tools
In this day and age, the choices of software and programs for small businesses is better than ever. Shop around and choose the system that best suits your needs. Small business owners are able to customize the way they run their business from the POS system used on site to online tools such as inventory tracking platforms. The technology is getting progressively more user friendly and choosing the right combination of tools for your business can save time, money and give you an accurate picture of where you are so can decide where you want to go.
4.Keep Your Records Organized
Regardless of who is in charge of your bookkeeping, it needs to be done in such a way, where you understand the process and can give your input. Being consistent and diligent in keeping the records you have, digital or the old fashioned paper, keeps you organized and makes it much easier to get all your ducks in a row.
5.Stay On Top of Your Receivables
In an ideal world, you will issue an invoice and get paid right away but in reality that is not quite how it works. Many of you know that some clients require terms and some are just plain forgetful. Using a software such as Quick Books online, can help you stay within a reasonable time period in which you should receive the payment. The late invoices get flagged and are sorted by date due. Every time the customer tab is clicked, there it is front and center, how many invoices you have that are outstanding vs. how much money was collected in the past 30 days. Right there, you may be happy to see the ratio or it may inspire you to make a few calls. Either way, having such information available is extremely valuable.