bookkeeping tips – Bada Business

4 Effective Bookkeeping Tips for Small Businesses

For business to be successful, it needs to record all its economic transactions chronologically without any emission or omission in the entry book. It helps a business to keep a tab on its dealings as well as inflow and outflow of the financial resources. Here, bookkeeping comes into picture. It undertakes the recording of financial transaction and involves preparing source documents for all transactions that are economic in nature, operations, and other dealings of an enterprise. It is not merely restricted to big business houses, forming the foundation of accounting bookkeeping are used in small as well as medium level business firms and non business enterprises. 3 Top Investment Schemes in India to put your money at!

For small businesses as well, a sound bookkeeping is an important prerequisite to keep all the financial transaction in check. It helps in regular valuation of the assets, tab on debtors and the borrowing activities of the firm. Bookkeeping also helps in keeping a check of embezzlement of funds and money laundering by an employee if any. Here are some tips for bookkeeping for small business:

Keep Personal and Firm’s Account Separate

The first and foremost principle of bookkeeping is to have a separate account of the business and the owner for financial purposes. Following the accounting principle of Separate Legal Entity, the accounts for both the entities should be different. All the transaction related to business should be done through enterprise’s account and not the owner’s personal one. 4 Smart Ways to raise fund for your startup without Investors.

Record Transactions Chronologically

One of the most prominent features of bookkeeping is that all the transactions are recorded timely and regularly. Ideally, all the dealing and financial events are recorded in the books of accounts on the day their occurrences. It also includes the accounts which are debited and credited after a transaction and a brief description about it. It helps the business to look for and clear discrepancies if any.

Organise Business Documentation

Various transactions are substantiated with relevant business documents including vouchers, bills, receipt among others. These works as an evidence to the transaction and provide various essential details about it such as the parties to the deal, date and time of the transaction, amount involves other terms and conditions if any.

Review the Records

To ensure that no fraud or miscalculation is taking place, a firm should keep reviewing its records on a regular basis. It helps business to evaluate all its transactions and accommodate for any omission or error in recording. It also enables the owner to keep a tab on expenses, account receivables, debtors, accrued income and other important accounts.

5 Good Bookkeeping Habits for Small Business Owners

5 Proven Bookkeeping Tips to Increase Cash Flow in your Business

Do you feel that bookkeeping is not an important business activity? You’re probably wrong if you think so.

What about money in the bank that could help you achieve your desired business goals? Now we’re talking.

You don’t have to make bookkeeping more complicated than it needs to be. Adopting some basic, good bookkeeping habits can help you avoid costly errors and stay top of your books each month with little-to-no hassle.

We have put together 5 bookkeeping tips for small business owners.

Follow these good bookkeeping habits to get a bigger and better handle on your cash flows:

1. Plan for Major Expenses

Is it likely that you will need a major computer upgrade or any equipment or machinery that needs to be replaced?

You should be very honest and put such expenses that could be coming up in the next one to five years, on the calendar year in advance.
Many small businesses are seasonal in nature, hence, it is essential for business owners to acknowledge the seasonal ups and downs, and how it will affect their ability to spend during those times.

By making sure that you have forecasted for major expenses and ups and downs of your business, you’re less likely to miss on business opportunities or finding yourself short of cash.

2. Track Your Expenses

It is important to track each and every expense, to keep your business’ cash flow going in a positive direction.

Before you start paying, tracking, and accounting your expenses, you need to separate your personal and business expenses.
Open a separate bank account for your business, so that you don’t have to waste hours examining your expenses at the end of the month. You will know the exact amount that your business has spent and the areas where the amount is spent.

At the time of tax filing, it’ll be much easier for you to write-off relevant business expenses.

3. Record Deposits Correctly

Adopt a good bookkeeping habit to record deposits correctly, whether it’s a pocket notebook and pen, an excel spreadsheet or a proper financial software.

Small business owners typically make a variety of deposits into their business account throughout the year, including, sales revenue, loans or cash infusion in the form of capital from personal savings.
You’re keeping yourself open to paying taxes on the money that isn’t your income if you’re not accounting from where each of the deposits have come.

4. Set Aside Money for Taxes

You know, as a small business owner, you have to pay taxes to the government at certain deadlines that are already known to you.

The income tax department imposes penalties and interest if the tax amount gets delayed or remains unpaid.

Hence, a good bookkeeping habit is to systematically put money aside for taxes, to make sure that the money is there when you need it.

5. Keep a close eye on your invoices

Many small business owners & entrepreneurs have to sell products on credit basis to their customers.

You should have a specific person to track billings of your business and a proper process in place, if a bill goes unpaid.

In case of late payments, you can do the following:

Issuing a second invoice
Making a phone call to remind the customer
Levying penalties such as extra fees after a certain deadline
Having policies for if a customer pays 30, 60 or 90 days late.

You should always remember that ’Every late payment is an interest-free loan and hurts the cash flow of your business’

With your books in order, you’re now ready to achieve your long-term goals, manage cash flows during seasonal ups & down, and improve the profitability of your business.

By analyzing your books, you’ll know exactly how much cash you need and how much you can afford.

Hence, good bookkeeping habits lead to better financing and cash flows of business’it’s that simple.