- Having a great business idea in mind and the motivation to start it is not enough to succeed in the business world.
- You need patience, consistency and a few habits to help you excel and be a step ahead of the competition.
- Take a look at these 9 useful bookkeeping habits that will improve your bottom line and help your business succeed.
Most people jumped into business to pursue their passion or calling in life. However, running a business takes more than doing what you love.
Often, business owners will find themselves thrown out of their comfort zone, deciphering jargons and dealing with issues they’ve never imagined before.
Therefore, it is important to understand the numbers in your business. You must have a business plan, budget, and target. It’s the best way to stay motivated and focused in business.
I’ve witnessed countless mistakes made by business owners in keeping their books. Bad habits, processes or systems will build up over time, leading to money lost or even trouble with the ATO.
How can I improve my bottom line with good bookkeeping?
Everything starts with you, the business owner. There are things you can do and habits you should cultivate in your business to boost your bottom line. I’ve listed 9 bookkeeping habits and tips that will help your business grow.
The 9 bookkeeping tips for small businesses are:
- Get regular advice or consultation
- Use a cloud accounting system
- Separate your personal and business accounts
- Be systematic
- Be consistent
- Think logically
- Document important things
- Be hands-on
1. Get regular advice or consultation
Getting a professional bookkeeper, accountant or CFO on your side will be an invaluable asset in business. You should seek regular advice on how your business is doing. This way, you will be able to detect small issues before they grow bigger. A good bookkeeper is worth their weight in gold.
You will have access to reliable data, which helps you make better decisions and minimise your risks. Decisions become easier to make as you are more informed. Advice and insights from your trusted consultant will help grow your business.
2. Use a cloud accounting system
Your accounting software is a powerful tool that can help your business grow. Cloud-based accounting software has revolutionised the way we run our business. Its ease and accessibility give us control at the touch of our fingertips. Real-time data now delivers valuable insights to track progress and grow businesses.
A good bookkeeper will be able to set up the best cloud system for you, which covers all you need such as GST, inventory, payment, super and payroll. They should customise the system and train you on how to use it properly. Cloud accounting comes with many benefits including access to real-time data, powerful reporting, automated tasks, documented storage and bank feeds.
The world has evolved due to our fast-paced lifestyles. We now crave the need for instant access to information. Most people carry mobile devices, so technology has had to become smarter. It makes good business sense to use smart technology to your advantage. With cloud software, you can invoice on-the-go and reconcile your bank accounts anywhere.
3. Separate your personal and business accounts
Personal transactions don’t belong in your business bank accounts. You need to see yourself and your business as two separate entities. The aim is to have your business support your lifestyle. Never mix transactions between the two.
Pay yourself a wage for a clear separation. Set up an automated transfer to your personal account weekly or monthly. You can breathe easy knowing you can afford your personal living expenses. You will feel liberated, and the impact on your cashflow will ease. Transactions will be fewer when reconciling your accounts, saving you time and money.
4. Be systematic
The task of bookkeeping can be daunting. Being systematic and making it a part of your daily routine will create good habits. Set aside scheduled time to log into your software.
Assess your accounting dashboard and action any draft invoices and bills. Review your bank accounts and reconcile all outstanding transactions. Send invoices and statements to your customers promptly to get paid faster.
When paying your suppliers, send a remittance to notify them to mark off your payment. You will notice these systematic tasks will streamline your processes, make your life easier and put more money into your business.
5. Be consistent
Be consistent in your approach when dealing with your accounts. If you receive a bill from a supplier, deal with it swiftly. It eliminates overpayments to your suppliers and highlights unpaid client invoices. Use the full functionality of your accounting software to its potential.
By being consistent, you can reduce mistakes in your books. You can plug any financial leakages and spot mistakes before it grows bigger. Reliable data also helps you make better decisions in business.
6. Think logically
Before processing your transactions, think of how you entered the transaction previously. Which expense or income account does it belong to? Knowing the answers to these questions will impact the accuracy of your accounts. Always think of what you are doing. Otherwise, you will wind up making a mess of your data, risking your profit.
Automation is your life saver when it comes to using cloud accounting systems. Set up repeating invoices to send them effortlessly. Repeating bills and invoice reminders will help your business tremendously. You will see increased client payments and improved cashflow.
Setting up rules for your bank feeds will save time and keep your accounts in order. However, automation is not a ‘set and forget’ process. Things will change and regular reviews are necessary.
8. Document important things
To document does not mean ‘to store mountains of paperwork in dust collecting cabinets.’ There is an increasing number of cloud software products entering the market. They are all unique with a purpose to solve a problem and most of them offer storage solutions.
Run your business more efficiently and use the software to your advantage. Notes give users a documented history with an audit trail of all involved. Attach files to your transactions for a reference check and to confirm accuracy.
9. Be hands-on
The decision to become a business owner takes time and energy, which can sometimes be our enemy. Often, business owners tend to take their hands off their finances and lose track of important numbers because they are too busy or stressed to handle it.
To be successful and profitable, you must be hands-on with your finances. You need to plan and follow through. If you steer off course, revise, adapt and focus on your vision.
Remember to be true to yourself and stay passionate in what you believe in. Be hands-on and seek advice but don’t rely on others to fulfil your dream. Business is supposed to be fun and support our lifestyle. Grab the opportunities by the horns to succeed.
Editor's update 07/10/2020:
Thanks for reading our article by Leigh Cummings at Account Aspects. We hope it has helped you gain a better understanding of good bookkeeping practices for small businesses. With so many acronyms and jargon used in the world of bookkeeping, members at SavvySME have some additional questions on the subject. We've responded to some of these FAQs below.
Do you need help with
There are 121 bookkeeping services on standby