Now that you’re in business, you’re in it for the long haul.
At least, that’s the hope.
The simple truth is this: the more attention you give to keeping clean books, the more likely you are to succeed in your business.
Now, not every company founder has the time to pour over the minutiae of numbers and financial statements. We’ll touch on how you can overcome the time issue in a minute.
But first, let’s cover the fundamentals you absolutely need to know in order to set yourself up for success.
6 Tips for Better Books
Set Up a Simple Record Keeping System
When you’re just starting off, a Google Spreadsheet might seem like the easiest place to record your finances. However, we recommend investing in an accounting system that is both intuitive and programmed for the kinds of records you’ll be keeping. Many people use Quickbooks or Xero, but you can also choose a free option such as Wave when you’re getting started.
Open a Separate Business Banking Account
Personal expenses and business expenses do not mesh. Make sure to open a separate business banking account, and don’t mingle your personal life into business essentials. Not only can this lead to confusion come tax season, but it can also lead to audits, and additional taxes owed.
Save Every Single Receipt
We can’t stress this enough. If you want to prepare for a painless tax season, then save all of your receipts from the very beginning… Even if the amount seems nominal. Afraid you’ll lose them? Get in the habit of snapping a photo every time a receipt comes in.
Stick to a Sound Process
Consistency and organization are the most crucial components of maintaining a clean set of books. Deposit money into the bank on a weekly basis, and stay punctual around invoices and payments. Reconcile all of your statements monthly to ensure that every item is accounted for. Remember that in order to truly grow your business, you need to make sure that the system you’ve implemented is scalable as well. Do what works for you, but whatever you do, do it consistently.
Forecast Future Expenses
It can be challenging to look toward the future when you’re preoccupied trying to get everything up and running right now. But ultimately, a good system will allow you to conduct predictive analyses of expenses down the road. And with a sound forecast, you can be proactive about generating additional sales or increasing your fundraising efforts before it’s a problem.
Don’t Go It Alone
The best thing you can do for yourself and your business is to hire an expert to do your books for you. Throughout my twenty-plus years in finance, I’ve lost count of the number of clients who have come to me in a panic because they can’t produce a clean set of books. Whether it’s an audit, an investment opportunity or even a potential buyer, a clean set of books is a key step in maintaining and growing a healthy business.
What might seem like a nuisance could easily become a disaster clad with historical errors that seem impossible to fix. Save yourself the trouble of a massive headache down the road by outsourcing your bookkeeping to a professional now.