Small business bookkeeping is not a task that you want to neglect. There may come a time in your business when it makes sense to hire a bookkeeper to keep up with all of your spending and revenue making. Until then, you're responsible for keeping up with your finances so that you can run your business effectively (and for tax purposes). Here are some bookkeeping basics for the momtrepreneur:
You should use a software that's designed for small business
bookkeeping. Your personal finance software will not have the
capabilities and reports you'll need for your business. Using an Excel
spreadsheet can be time consuming and difficult to manipulate. Two
popular programs to consider are Quickbooks or Peachtree. Quickbooks
has a reputation of being easier to use than Peachtree. You can get a
demo of each of these before buying a full version, to try them out
ahead of time. The software will count as a business expense, and it
will be a useful tool not just for you, but for your accountant.
Online Banking and Payments
One of the easiest ways to take care of the banking records for bookkeeping is to go paperless. If possible, set up automatic withdrawals from your bank account. For example, you can set up web hosting, monthly Internet access bills and other fixed expenses in a way that they take the money from your account when it's due. This means less paper for you, and it's recorded on your online bank ledger. For the other bills that aren't fixed, pay them directly on their website. Stop paper bank statements and instead go online yourself to view your account, and make entries into your accounting software.
There may be times when you make purchases for your business offline, and you'll need to keep those receipts. When you make purchases online, you'll either get the option to print a receipt or you'll get one in your email inbox. However, you'll need a system for the receipts you receive when you're out and about, because those will need to be kept as well.
You can use a pocket folder, pencil case, a small box or another container of your choice to store receipts. Then, you'll need to decide how often you want to enter those receipts. When your spending is far and few in between, it might make sense to do it monthly. However, it's important to develop a habit of small business bookkeeping, and a scheduled weekly time to enter your receipts might help with that.
Keeping track of your sales is just as important as tracking your spending. Use your software to fill out customer information, invoices or receipts, and payments. This will help you with your finances and marketing. You can generate reports to show you where you're making the most profits, or how long it's taking you to collect payments. These reports will help you to spot any weaknesses, and you'll be able to correct any mistakes in time. You should generate reports at least once a month.
If you plan on doing your own books, do what you can to learn as much as possible about small business bookkeeping. The basics described above will help you get started with the systems and habits you need to form.
Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.