If you own a business, you will know that running it well is a lot of work. To ensure smooth operations and give your business opportunities to grow, many processes need to be executed seamlessly. One of the most vital ones is bookkeeping and accounting.
Poor Bookkeeping Services Can Turn your Business Upside Down
To put it simply, bookkeeping is recording all the financial transactions that take place in your business. This involves balance sheets, income statements, revenue reports, ledgers, the whole shebang. When done professionally, bookkeeping services can help you not just grow your business but also save it in the face of adversity.
If done wrong though, it can lead your business to ruination. Bad bookkeeping can wreak havoc on your business, you could lose sales, mess up inventory, lose funding and expansion opportunities and even run into legal issues.
Here are some ways you avoid the mistakes
There is a reason so many business owners mess up bookkeeping so often. They make the rookie mistake of trying to do it themselves. Finance is tough; making sense of several spreadsheets, along with keeping track of the labyrinthian tax laws can be daunting.
No matter how small the business, you will have a myriad of things on your plate already, why add another one?
Keep doing what you love and excel at; managing employees, building products, all the fun stuff. It is best to outsource bookkeeping and accounting services to professionals.
Ideally, get someone that has experience in exactly what you’re doing. An accountant that manages businesses will be more suited for your work than someone that does personal accounts.
However, if you still wish to embark on this journey yourself, there are some things that you should keep in mind.
- Automate it
As your business grows, you will get more customers and the number of transactions occurring within it will also grow.
Entering data manually will no longer be feasible. That’s why, many businesses use software that automates many bookkeeping systems like double-entries, generating receipts and so on.
Although you may feel more comfortable with manual data entries, it could be a waste of precious time for you and your employees.
Hence, it is best to invest in software that suits your needs to ensure the smooth functioning of your finances.
Organize your finances
For you, owning a business may not be only about the money but it will be a lot about the money. And, to make sure you do not lose a lot of it, you will need to organize your finances. By that we mean:
- Separate your personal and business accounts
Many business owners tend to start off by using their personal accounts. As a rule of thumb, keep your personal and professional accounts separate so that future confusion can be avoided.
- Categorize and chart financial statements
To update your financial statements, you need to know what they mean. The difference between an income statement and balance sheet or a receipt and invoice could make a massive difference in your bookkeeping.
Reconcile bank accounts
The bigger the business, the bigger the volume of transactions. It is crucial that the different transactions occurring across all your accounts reconcile. Make sure that all the entries across different accounts are in alignment.
- Consider depreciating assets
While balancing your sheets you must account for your assets and along with that, their depreciating values.
Doing this right will tell you exactly how much your business costs, a piece of information you need to decide future expenditure.
- Be responsible
This one goes without saying, still, you must remember that your business’s financial records are the holy grail.
Messing up the books can cause you to strategize poorly. But more importantly, it could run you into trouble with the law.
If taxes are not paid properly and in full, you could be charged with tax evasion or internal fraud. Hence, you must treat bookkeeping and accounting practices with care. To that end, you can:
- Double-check expenditures
Expenditures reflect how your money is being spent. Hence, always double-check them, otherwise, you may end up paying extra or less than expected (both won’t lead to any good).
- Put the exact value
Every time you make a transaction, always enter the exact value, down to every decimal point.
- Don’t take round figures
Although round figures are psychologically satisfying, they can cause problems in your books. They can lead to mathematical miscalculations and are best avoided where possible.
Conduct regular audits
According to the financial cycle in your region, you must conduct audits on a regular basis. For most countries, conducting audits at the end of every month is standard practice.
This process will help you predict oncoming expenses and dealings, which will in turn help you plan your business better.
Although it requires care and effort, good bookkeeping is essential to a business, so let an experienced professional guide you. Get in touch with Billah and Associates for the best in accounting and bookkeeping services in Mississauga, ON, Canada.