7 Pro Tips for Easier Bookkeeping

Bookkeeping is rarely a small business owner's favorite task, but there are ways to streamline your systems so that receipts and invoices don’t start piling up. The following tips should give you the confidence that easier bookkeeping is possible.

1. Learn about Bookkeeping Before You Start

Many small business owners start out with very little knowledge about bookkeeping. After all, you got into business because you had a specific skill set to offer, not because you love data entry and bank reconciliations. However, at the end of the day, you are running a business, so you'll need to learn how business finances work.

In a small business bookkeeping course, you'll learn about general ledgers, accounts payable and receivable, cash flow and profit & loss statements, balance sheets, and expense tracking. Once you've learned the basics of bookkeeping, you'll feel much more confident and will be able to set up a system you can use from the get-go.

You can also check out our Bookkeeping for Beginners Guide, which offers numerous actionable tips for starting out.

2. Separate Your Business and Personal Finances

As a small business owner, it's tempting to conduct financial transactions relating to your business activities from the same bank account as your personal transactions. However, things can get messy very fast. For example—was that cup of coffee the one you bought for a client or was it the one you got on your way home from work?

To make business expenses easier to track, open a separate business bank account with its own credit or debit card and always use that account for business transactions. You can then simply pay your salary to your personal bank account and everything should balance out perfectly.

3. Use Small Business Accounting Software

Many small business owners start out recording their transactions in an Excel spreadsheet, which is fine if you categorize every item and double-check the accuracy of your figures. However, as your business grows, using bookkeeping and invoicing software with accounting features makes the process simpler. 

One of the best accounting software options for small businesses is QuickBooks Online (QuickBooks Self-Employed if you're a sole proprietor). After receiving some initial QuickBooks training, you'll be able to take care of your business finance all in one place. One of the best features of this software is that your bank information can be added automatically, making it especially easy to reconcile your accounts in QuickBooks.

4. Digitize Everything

To make bookkeeping easier, many small business owners digitize their invoices, receipts, and bills. This keeps everything together and prevents problems caused by faded or lost receipts. You can also switch to digital receipts for sales transactions to ensure an accurate record for you and your clients.

Depending on your state's rules, you may be required to keep original receipts in addition to a digital copy. In a Florida sales tax audit, for example, you are expected to keep receipts that verify your returns for a period of three years. However, if a physical receipt has become damaged, a digital copy will usually suffice.

5. Schedule Your Bookkeeping Tasks

To prevent your bookkeeping from piling up, it's best to create a schedule for bookkeeping tasks and follow this schedule diligently. For example, data entry can be done as you go—or at least once a week. Then, bank reconciliations should be done monthly and tax payments made quarterly (depending on your location and business type).

Again, using accounting software like QuickBooks makes your bookkeeping much easier. All you need to do is enter the data and reconcile your bank accounts each month, and QuickBooks does the calculations for you. If something is awry or your accounts aren't balancing out, finding the issue sooner rather than later will make your bookkeeping easier going forward 

6. Review Your Reports

As a business owner, it's possible to cover the data entry side of things and never look at a financial report. However, financial reports provide a lot of valuable information that can help you run your business and detect bookkeeping mistakes.

For example, you might have just had a better-than-average month but your cash flow for the month is negative. This could mean that there was income you forgot to include, several of your clients haven’t paid for their purchases, or you spent more on materials than you actually made because you miscalculated your profit margins. Noticing these kinds of issues quickly will help you make the necessary corrections.

7. Outsource Your Bookkeeping to a Third Party

If you really don't have the time or interest to do your own bookkeeping, the best solution could be to outsource the job to a professional small business bookkeeper. Regardless of who does your bookkeeping, the important thing is that it gets done!

Having accurate records of your business transactions is the only way to make sound business decisions and stop losing money from forgotten invoices and compounding interest on payments that haven't been made. With accurate reports, a small business accountant will also be able to help you with strategic tax planning and identify opportunities and risks.

Easier Bookkeeping Is Within Reach

In short, the secret to easier bookkeeping lies in knowing what you're doing from the start and setting up systems that work for you. As long as you have an appropriate system in place and follow the system diligently, you shouldn't have any problems. 

Remember, if you're just starting out, you've gotten behind, or you're preparing for the next stage of growth, a professional bookkeeper and/or accountant can help you come out on top.