Small Business Bookkeeping Tips for the Novice Business Owner

Small business bookkeeping is one of those “must do” chores that many small business owners would rather not do. You want to be about the business of your business. But the following small business bookkeeping tips can help save you time and money in the daily operation of your firm and when working with your accountant at tax time.

Keep It Simple

The first rule of any job at a small business is “Keep It Simple.” That goes double for small business bookkeeping because for most small business owners it is not their primary line of work. You are in business to make something, sell something or provide a service. So minimize time spent on bookkeeping with a simple system.

Look at your most recent tax return. If you haven’t filed a return yet, make a list of the types of expenses you have and the sources of revenue. The key is to come up with categories that do two things. First, you want categories you can use year after year. Second, you want them specific enough that they provide useful data to your accountant.

Be Consistent

Keeping things simple will make the job of small business bookkeeping easier. Being consistent can save you time and money. Be consistent with the categories mentioned above not just year to year, but month to month, even day to day. By recording your income and expenses the same way throughout the year, you’ll have a simple job of it at tax time.

Make It Part of Your Routine

For many novice entrepreneurs, the excitement of the work comes in dealing with customers, meeting needs and handling problems. But you will be creating a problem to handle in the future by not working daily on your small business bookkeeping.

Make it a part of your daily work to use the system created above and record the financial data for the day. As your business grows, you can hire this work out. But it must be kept up with on an ongoing basis. The time to get organized with your small business bookkeeping is not on the way to the accountant’s office.

Keep the Records You Need

You need to keep records of bills paid, invoices sent and money collected. Because you’ll be depositing cash daily, be certain to keep records of your deposits. As you computerize, many of these might be stored electronically. But it is always good to have a paper back up especially in the early days of small business bookkeeping.

Keep records year to year as well. Your accountant will return tax documents to you. Keep them in traditional “banker’s boxes” off-site and save them for seven years.

Make a “Tickler” File

Your business day will go by fast. Then it will be next week. Then next month. Just as you made it part of your routine to work on small business bookkeeping daily, make a “tickler” file that will alert you to important dates. If you’re filing quarterly, this is particularly important. Consistent work day by day will make a small job of quarterly filings. Waiting until the last minute turns what is already an important job into a headache.

Additionally, you’ll owe payroll taxes as your business grows. Penalties abound if you’re late.

Key words: small business bookkeeping

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