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Badly tracked finance can cause a lot of problems for your business, from poor cash flow to incorrect tax filings. These issues can put a new business at serious risk. Good bookkeeping habits can help a young business to thrive, not just survive. Adopt these good habits to guide your business to success.
Get Professional Help To Prepare Tax Returns
Business owners are pulled in a lot of different directions. This is why it’s a good idea to outsource work that you don’t have the time or expertise to do. If you’re like most entrepreneurs, you’re starting a business to pursue a passion, not to become an accountant, and worry about things like, ‘4 mistakes to avoid as a management accountant’.
Outsourcing the job to someone who can do it faster and better is a smarter choice than taking it on yourself.
A professional accountant can do more than just make sure tax returns are right. Someone with a trained financial eye can see ways that your bookkeeping process or your business can be improved.
Don’t Go Entirely Hands Off
Outsourcing your bookkeeping doesn’t mean you should hand it over entirely to someone else. You should also review your reports, understand what’s happening with your business, and ask the right questions when you don’t understand.
No matter your level of accounting expertise, it’s a good idea to understand some of the basic numbers yourself, including profit, trend in expenses, accounts receivable, profit per customer, and how your client funnel works.
Get The Right Software
You shouldn’t skimp on the program that you use for your accounting. There’s a lot of choice for software, so businesses don’t have to use accounting software only designed for accountants.
There are a lot of different options available, so look for a system that will best meet the needs of their business, and one that you will actually use. If you’re not a trained accountant, then avoid systems that need a huge manual to get you started.
Document Your Processes
It can help to write documents that explain how your bookkeeping processes should run. Noting down all your processes prevents confusion and answer any questions that anyone has before they’re even asked.
Consistency is key for good bookkeeping and can help you to see errors later on as you will have a clearer idea of what could have gone wrong.
Keep Expense Receipts
You can’t have a clear idea of how much your business is spending if you don’t keep your receipts. This is pretty straightforward for credit card purchases, as you will have both your receipts and monthly statements to check them against.
Things can get trickier is you aren’t careful with tracking with cash expenses. The receipts from cash purposes are even more important as there are no backup statements to check against. Some people find it helpful to keep a small notebook to log cash expenses as they come up. You could do this in an accounting app in your phone, and take pictures of the receipts as you go.
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