You know what’s even better than using software to automate your bookkeeping? If you want to crunch the numbers a bit faster and get back to the more exciting parts of your business, we have a few bookkeeping tips to help simplify (and speed up) the process. Not sure where to start or which accounting service fits your needs? Our team is ready to learn about your business and guide you to the right solution.
Keep track of cash payments
Robust accounting software programs can be extremely helpful on this front, since they are specifically designed to help you track both one-off and recurring expenses. However, plenty of small-business owners utilize basic spreadsheets such as Excel or even rely on a pen-and-paper ledger. Small-business owners know that smart money management is one of the most crucial aspects of success, regardless of how much revenue a company brings in.
This can nonrecurring items definition be sufficient for very small businesses that aren’t incorporated. As a business owner, you’ll most likely have to create a complete financial report at least once a year, for tax purposes. However, there are plenty of reasons to make quarterly, or monthly financial statements as well. Frequent financial reports are a great way to check on your budget, and figure out where you can make adjustments if necessary. Records older than six years can be securely disposed of by hiring a professional document shredding company.
Bring Your Bookkeeper Up to Speed
This way, when you make a purchase, you can immediately file the receipt in the applicable expense category, saving you time when you need to make your expense calculations. The Net Present Value (NPV) of your business is a calculation that helps you analyze potential projects or investments that might be worth your while. The NPV calculation is a snapshot of a period of time that illustrates how much money you’ve had come in versus how much you’ve paid out. In the accrual method, on the other hand, you would record the expense in January, on the date that you received the invoice — regardless of when you ended up paying for the parts.
- To understand the difference between these two methods, take this example.
- And the only way to know that for sure is to have accurate, up-to-date books.
- If your small business uses accounting software, it will help track when invoices are due.
- This can be sufficient for very small businesses that aren’t incorporated.
- Keep all cash, credit card, and other financial activities separate.
Spend more time growing your business
Bookkeeping allows you to have a greater understanding of the areas within your business where you can trim costs. As a business owner, you’re responsible for reporting crucial financial data about your firm to potential investors and other stakeholders. Bookkeeping programs that incorporate graphs, charts, and other visual aids make it easier to increase data precision and improve communication when you’re wooing investors. Routinely cross-check receipts and cash flow during your weekly bookkeeping session to keep your cash systems polished and up-to-date. Record and categorize your documents every week during your weekly bookkeeping session. Quick, regular audits of your documentation and transactions will ensure that you’ll never have a stressful night’s sleep—at least as far as your books are concerned.
However, if your business is incorporated, or if it’s your sole source of income, the single-entry method just won’t cut it. The double entry method leaves less room for error, making it the better choice for balancing complex books. With the help of cloud accounting software for small-business bookkeeping, you can pretty much automate the process.
It’s basically an assumption for cost-flow purposes that states the first goods you purchased are the first goods you sold. This assumption most closely resembles an actual flow of products earning it the distinction as the most correct valuing method in theory. Consider your local supermarket — the first gallons of milk the store purchased to sell to customers are the first gallons sold usually. Otherwise, a lot of milk (product) would spoil, thus creating a loss for the store. After some of your finished items have sold, you can track the cost of goods sold by including all direct costs. This can be done using the traditional method or with activity-based costing.