As someone running a small business, it can be hard for you to stay on top of your accounting, especially if you don’t have training in bookkeeping or accounting methods. Often I’ve dealt with businesses that have very little idea of where their money comes from and where it goes. And you can forget about depreciating assets or anything more complicated than “money comes in, money goes out.”
Don’t worry, though. It’s not hard to stay on top of your books provided you follow a few simple steps. You’ll be ahead of a lot of small business owners if you do the three things outlined here. It’s relatively easy, and all it takes is a little commitment.
1. Stay organized
I can’t stress this enough. There are far too many business owners who keep their documents scattered all over the place. When tax time comes, they’re scrambling to pull together all the documents they need and stressing over the documents they’ve set aside that are somewhere buried in that pile on their desk.
Don’t be that person.
When you get receipts, make sure you’re saving them in an organized fashion. Keep your invoices in one place and make sure they’re correct. Keep your inflow and outflow separate. That will help you when you’re doing your books.
Maybe you’re not making enough yet to farm out your books to someone who knows what they’re doing. Or maybe you’re just using a spreadsheet to track things right now. There are apps and solutions like Wave that can help you get off the ground. It’s not hard to get something in place, especially if your business is small.
2. Do the work
This is probably the hardest part for most small business owners. Because after all, you want to work on your actual business, not the accounting.
Your accounting is your business, though. You have to put the time into that because without it you’ll never know what performs well and what performs badly or how you need to approach your business down the road. You’ll never know where your areas of strength and weakness are financially.
Just doing the work will get you much further than you’d be otherwise. And as a bonus, you’ll save any accountant or bookkeeper that you hire a lot of time if you’re staying on top of things.
3. Check your work
Once you’ve added your accounting entries, it’s crucial that you go back and check them.
Accounting is detail-oriented, and even a small error when you add everything together can be indicative of much bigger problems. If you go back and check your work, you can save yourself a boatload of trouble trying to sort things out down the line. Don’t wait—do it right when you enter things.
If you’re staying organized, doing the work of putting in your entries, and checking them as you enter them, you’ll have an easier time with your business and make it much more efficient if you outsource your books. Stay ahead of the curve and don’t let your business books fall into wrack and ruin.