How to Keep Books for a Small Business
< View All PostsManaging your books is a big part of keeping your business operating at its best. Yet, for many organizations, bookkeeping is difficult and time consuming. Learning how to keep the books is necessary, and with a bit of help, you may find it provides you with guidance and insight into how your business is running on a consistent basis.
If you need help in learning how to keep books for a small business, know that a bookkeeping service for small business can help you.
How to Manage Bookkeeping for Small Business
Bookkeeping technology has grown significantly over the last few years. Now, many tasks can be automated, so you don’t have to think about them often. Yet, that doesn’t mean you should not put some time into managing your books. Here are a few things to help you get started.
Using Software
One of the options you have – that many small businesses use is setting up bookkeeping software. This may help speed up and streamline the process, no matter if you manage to do your books yourself or turn to a professional for help. This software can help connect your business bank accounts, allow you to do some basic data entry, and reconcile all of the transactions in your business. It can help you with various goals, too, such as knowing your profit and loss.
Choosing an Entry System
The next step in setting up your business’s books is to choose an entry system. There are two options, a single and double entry accounting method.
In the single entry accounting method, you record your transactions just once. This can be as an expense or as income. It is the most straightforward method of managing your books and typically is best for smaller businesses without a lot of assets, including inventory or equipment.
A double entry accounting method uses a debit and a credit as a way to balance the books between your accounts. It can help to prevent errors when reporting transactions.
Choosing an Accounting Method
It’s also necessary to select either a cash-based accounting method or an accrual based accounting method. In a cash based system, you record the transaction at the time that money changes hands, such as when you pay bills for your expenses or when you receive the income from the customer.
In the accrual based method, you record your invoices and bills into your books even though your funds may not have actually exchanged hands just yet. This is typically the most common method used for businesses.
Paying Your Employees
Once you have your accounts set up, you also need to determine the most effective way for you to pay your employees. You can set up payroll yourself, sometimes within your accounting software. Or, you can use a separate payroll service. The method you choose depends on the costs you want to incur, whether you want to spend time doing the work yourself, and the type of software available to you. Nevertheless, it’s impossible to balance your books without accounting for your employees’ pay.
Setting Up Accounts Payable and Receivable
Accounts receivable are those funds that people owe to you, such as when a customer purchases materials from your business. Your accounts payable needs to manage the issuing of invoices for customers to pay and may include steps for paying for projects over time. You also may need to have a method set up to allow for the issuing of statements.
Accounts payable are the funds you are paying out. This includes any payments you need to make for your utilities, vendors, and other purchases. Generally, small business bookkeeping will need to have an efficient way of tracking bills as they come in, making sure payments are made on time, and working to manage invoices on time.
Can You Do Your Own Bookkeeping?
The big question you have to ask is if you need help managing your books. Keep in mind that bookkeeping doesn’t involve managing your accounting (which includes more documentation and tax planning). However, most small businesses need to consider the benefits of hiring a professional to manage all aspects of the process.
Before you make any decisions consider a few factors.
Do you have time? Managing your books or hiring someone else to do it really depends on the amount of time and expertise you have. If you have a lot of time, then doing this on your own may make sense. If your time is best spent on other tasks, then it may not be the route to take.
Do you want help with tax planning? Your accountant can provide some additional support for you as you make purchases and investments throughout the year to better manage your taxes.
Are your personal and business finances separate? If you do not have this in place just yet, start here. A bookkeeping specialist can help you to do this.
Are you having trouble with inaccuracies? If you are currently having difficulty with managing your business’s finances, or it has gotten away from you, hiring a professional to handle this process may be critical.
Are your books organized? Another reason to hire a professional is that you just do not have the time to input data or spend time organizing invoices. You may have no experience in this.
Keep in mind that hiring a bookkeeping specialist or an accountant can be an investment you make into your business. It could even be a tax write-off in some situations. If you plan to manage your own small business books, use software that’s easy to use (or take a few classes to learn to use it). Dedicate time to the process each week to ensure you don’t be behind.
Bookkeeping Management from Eco-fyle
One of the best ways to ensure your company’s bookkeeping is exactly what it needs to be is to invest in a bit of help. Our team at Eco-fyle can help you start and manage your small business, no matter what services you need. Let us guide you to proper bookkeeping and tax guidance. Give us a call now to learn more.
