Accounting Tips for Business Small Business Owners
By: Danielle Cottle, CPA, CGMA- BSST Manager
Too often I hear from business owners that they don’t have enough money in the budget to hire a bookkeeper but they don’t have time to do the accounting themselves. The business owner is too busy with the day to day operation of the business and simply don’t have the time to handle all the bookkeeping needs. The owner convinces themselves that they will have time next week, or next month but before they realize it is time to pay a quarterly estimated payment or file annual taxes and their books are a disaster. They have to spend days and weeks reconciling a years worth of business activity when they often don’t remember what some of the purchases they made were for and they don’t want to dedicate hours to reconciling the bank and credit card accounts. While your business may still be in the start-up phase or you are waiting to hit that next revenue goal before hiring a bookkeeper, here are some tips that may help you stay on top of the bookkeeping for now:
- Use a cloud based accounting software. There are several cloud based accounting softwares that range from free (such as Wave Accounting) to those with a small monthly fee (like QuickBooks Online or Xero). Cloud based software allows for you to easily access your accounting file so if you can find a half hour in the morning while drinking your coffee at home or an hour after the kids go to sleep, it is quick and easy to pull it up anywhere at any time.
- Setup bank and credit card accounts on the accounting software and review the feeds on a timely basis. Software like QuickBooks Online will automatically download transactions nightly from all of your accounts. If the accounting software doesn’t recognize the transaction importing from the bank account, it will sit in a holding account for you to review. Many times I see this “Review” account pile up until it contains hundreds of transactions and becomes unmanageable. Although it will initially take some time to set up, I highly recommend you create and manage rules for the bank feeds. This will save so much time going forward by having the software automatically match transactions and code them to the correct account on the financial. For example, if transactions on your company credit card for Speedway are always for gasoline, create a rule to always record Speedway transactions to Travel expenses. It takes five minutes to create the rule and it will save you from sorting through hundreds of unrecorded transactions later.
- Third party applications. There may be times when the cloud accounting software isn’t sophisticated for some of your needs. For example, you may own a restaurant and prefer to track daily register sales on separate POS software. Or you may own a manufacturing facility with thousands of parts, assembly items and finished goods and prefer to track inventory in another program. When researching what third party application to use, find one that integrates easily into your cloud based software. This reduces the need for double entry into two softwares and it eliminates the potential for typos if manually keying in the sales or inventory. Finding a third party software that integrates with the cloud based accounting software will save time and errors later on.
- Review reports often. Reports generated out of your accounting software are critical for decision making, feedback and overall business performance. Most accounting software is programmed with several standard reports and often allow you to save customized reports that can provide management with a more detailed understanding of the figures. Examples of reports that you should be looking at weekly are: Balance Sheet, Income Statement, Statement of Cash Flows, Accounts Receivable Aging and Accounts Payable Aging. If you set a reminder to look at the reports weekly, it will force you to be accountable to yourself and keep up with the bookkeeping.
I once read that it takes 21 days of doing something for it to become a habit. If you can dedicate yourself to keeping up with the accounting, it may become manageable and a part of your daily routine. And if you don’t want to take these steps, let us take them for you. We take these steps with so much joy it is like dancing a jig to us! Or, maybe your business has grown so much that you are just a point where outsourcing the accounting functions makes the most sense for you. We see that all the time as well and we are ready and willing to help you. Contact us today.