One of the most important records to track and keep, especially for new and small businesses, is the financial records. Many business owners often neglect this aspect of their business record keeping. The reasons are various: they don’t know how to do it properly, don’t have the time to accomplish it, or lack the tools to do it well.
Many business owners, especially those who wish to save money, prefer to do record keeping themselves. But if you’re not organized with your records, you may encounter bigger problems later on. Even in business movies, you see owners prioritizing bookkeeping since it is crucial to seamless operations.
Reduce the stress of financial record-keeping by following these steps.
Capture The Information
The rule of thumb in record-keeping is if it’s not there, it doesn’t exist. This is where website capture becomes important.
Start practicing capturing all records as you start your business. Even if you’re not new to the business but aren’t practicing record keeping, it’s not too late to start. Once you’re used to capturing, it will become automatic.
It sounds easy, but “capturing” can be tricky yet one of the most important parts of the process. Keeping track of every amount you spend on your business, as well as how much you make in sales. Always keep your personal and business expenditures separate – even if you always pay your business back.
No matter what the case, always get into the habit of gathering information. Everything you capture should always be up-to-date and include a description of the amount, item, and date.
Always Double Check the Information
Double-checking your records may seem like a time-consuming process but it can be a lifesaver, especially if there’s an error in your records. Spend an hour every week or so to go through everything you’ve captured to make sure that all the details are accurate.
When capturing or recording data, include enough details on the expense so you can record them accurately. For instance, if you bought pens for $3.00, don’t just write “pens, $3.00.” What were the pens for?
Set up a time to double-check everything. Don’t wait too long or you’ll forget the information.
Record the Information for Saving Purposes
When you record the financial information, you convert it into a more usable form. Always record everything you’ve checked or turn them over to your bookkeeper. Make sure to do this monthly. Input the details into accounting software or a spreadsheet. In terms of using online software, find the one that works for you. Just make sure that everything you record can be seen monthly.
Invest in the Right Accounting Software
Buy the right accounting software to keep your finances organized. If you’re not sure what software you should buy, talk to your accountant. They can offer professional recommendations. As much as possible, buy online software that enables you to access information wherever you are (make sure you have a strong internet connection).
The good online software will also continually back up your files via the Cloud. Despite having good software, it’s best to have a hard copy, too. It would be best if you practiced the habit of backing up your files to make sure you don’t lose any data.
Keep a Complete Record of Accounting Documents
Legally, businesses are required to keep accounting records. It’s not enough that you keep the records; they should be detailed enough to explain your transactions. Your business’s accounting records should contain all the liabilities and assets of the company. All of your entries each day should sum up the amount of money you received and spent.
Also, you must keep and make the following documents accessible upon request:
- Bank account statements
- Credit card statements
- Receipts and invoices provided for services or sales provided by your business
- Invoices for services, goods, and other business purchases
- All financial statements, including balance sheets and profit and loss statements
- Records of payments made to employees
Establish Business Bank Accounts
One of the best ways to set your business apart from you, the owner, is to establish a bank account specifically for the business. Apart from distinguishing your business from your account, you can also separate business expenses and activities apart from your personal ones.
Keeping and maintaining transactions and accounting records enable you to meet all of your tax obligations, as well as helps you regularly fill requirements without worrying about the interests or penalties.
Even if you’re unfamiliar with financial systems, you can set one in motion and keep it running without exerting so much effort. After you’ve formed a habit of collecting information, the rest will come along easier.