New Year’s Resolutions: 7 Tips for Busy Bookkeepers

 

Managing the finances of a small business is an essential part of a business owner’s or bookkeeper’s job. You’re almost certainly involved in every aspect of your organization, and it can be easy to let some things slide. Don’t be tempted to do that with your accounting—staying on top of your finances will keep your business afloat, give you room to grow, manage your cash flow properly, and ensure you don’t run into trouble with the IRS.

The new year (or any time, really) is a great opportunity to review how you’re financially managing your business—so without further ado, here are our tips and tricks for bookkeepers.

Separate Your Business and Personal Bank Accounts

Tracking all of your business and personal income and expenses in one account can be a nightmare, so it’s worth having clear, distinct bank accounts for your business and your personal finances. In fact, if you’re a certain type of business like an LLC or a corporation, you’re legally required to have separate bank accounts. If you haven’t already split off your business income and expenditures into another account, the time is now.

Setup an Online Accounting System for Easier Financial Management

If you’re still manually chasing invoices, tracking expenses, or reconciling your books, there is a (much) better way. Online accounting software can remove an enormous amount of the pressure involved in financially managing a business, making it much quicker and easier to perform common bookkeeping tasks. For example, you can create an invoice in seconds, setup periodic expenses, import bank account transactions, and much more. Bonus points if you choose accounting software that integrates with Biller Genie, like Quickbooks, Xero, or AccountingSuite. Brilliant!

Automate Your Invoicing to Get Paid Faster

The sooner you send out an invoice, the sooner you’ll get that delicious money in your bank account. Advanced invoicing software like Biller Genie can automate most of the invoicing process like sending out invoices and reminders, following up with customers, and accepting online payments. When a client makes a payment, that gets updated into your accounting software making it easy to reconcile all your transactions and stay on top of things.

Offer Customers Multiple Payment Options

Your clients will appreciate having multiple ways to pay. Whether you offer payment by debit card, credit card, ACH, bank transfer, check, or another service, it all helps to provide options. Remember that there are costs involved with some types of payment, so be sure to work those into your profit and loss calculations. You can even provide payment plans to some customers, so they can spread their invoice payments over time.

Reconcile Your Bank Transactions Against Your Invoices and Expenses

When you’re bookkeeping, you don’t want to overlook anything. That’s why it’s always important to reconcile all of your financial transactions against your business bank statement. If it’s in your bank account, it’s money you’ve actually received or spent, which means you need to track it in your accounting system. It’s a useful way to ensure everything lines up with your invoicing, expenses, salary, drawings, and other transfers of money.

Understand Your Taxable Amounts and Filing Deadlines

The IRS will tax your business in various ways, including self-employment taxes, federal income tax, and, if you pay salaries, payroll and FUTA taxes. You may also be taxed by your state department of revenue. It’s important to record all of the filing dates and work with a tax professional to calculate how much you will owe. It’s also very likely that you will need to pay estimated taxes four times a year.

Review Your Business Finances on a Regular Basis

Since money is the lifeblood of any business, it’s important to complete regular checkups to ensure everything is working properly. We suggest an in-depth review of your business finances at least once a month, and an overview every week or two. Here are some of the areas you’ll want to consider:

A Snapshot of Your Finances, Right Now

All accounting software should provide an overview of your finances. That could include your current bank balance, outstanding invoices, month-to-month income and outgoings, and several other areas. We recommend checking this on a weekly basis so nothing catches you by surprise.

Details of Your Bank Balances and Transactions

Once you’ve imported or integrated your bank statements into your bookkeeping software, you can keep a close eye on transactions and balances. We recommend reconciling your bank accounts a couple of times a month, possibly more or less frequently depending on how many transactions you have.

Cash Flow Into and Out of Your Business

Cash flow can make or break your success, so it’s important to understand your accounts receivable, accounts payable, and other areas that influence your liquid cash. This can involve:

  • Reviewing accounts payable for any big bills, taxes, or other expenses that are coming up.
  • Reviewing accounts receivable for unpaid invoices or other outstanding amounts.
  • Looking at your products and services to see what is, and isn’t selling well.

We recommend a monthly dive into your cash flow.

Profit and Loss Categories

One of your most important accounting reports will be your P&L. If you’re categorizing your income and outgoings, you can see where you’re making and losing money. This can help you tighten up your cost controls. We think it’s a good idea to do this every month or two.

Income Trends

If you look at how much income your products or services are generating over time, you can focus your future business development into the most profitable niches. You might also be able to identify seasonal variations or get early sight of potential issues and opportunities. We recommend doing this when you’re developing your business strategy.

Problem Customers

Everyone has them, whether it’s late payers or people who don’t seem to be satisfied. If you identify customers who persistently cause issues, you might be able to create special payment terms, or stop providing them with products and services.

Once you have a good insight across your finances, you can make more informed business decisions, backed up by reliable data—all of which helps your business to scale and grow responsibly. 

We recommend reading through each of these bookkeeping tips, prioritizing them by the benefits to your business, then introducing them one at a time. That way, you can build up good bookkeeping habits without being overwhelmed by change.

Tags: AR Automation, Biller Genie, automated invoicing, Automation tool