Small Businesses

Top 10 Small Business Bookkeeping Strategies

These tips for small business bookkeeping will help you keep your books current and in good condition. They will help you keep your finances in control and allow you to manage your working capital more efficiently and securely.

  1. Before you start recording transactions in your ledgers. Make sure to organize your paperwork according to these basic bookkeeping principles. It will save time, which is time well spent.
  2. Find out how much you make in an hour working for your business. Hire a professional bookkeeper if the answer is higher than the cost of hiring one. You can also do the transaction processing by yourself if you don’t have a professional bookkeeper. You can get a tax accountant to handle your year-end filing to avoid having to keep up to date with government rules, and to take advantage of tax allowances.
  3. After you have your paperwork in order, think about how you are going to record your transactions. You can either use a handwritten ledger or software to record your transactions. Prevent dissatisfaction by understanding your bookkeeping software requirements prior to purchasing anything.
  4. Open source accounting software is an option for those who don’t have the funds to invest in financial software. This software can be downloaded at very little or no cost. To learn more about the benefits and drawbacks of open-source software, click the link.
  5. These basic bookkeeping tips will help you keep your transactions organized once you have decided where you want to record them.
  6. Perform a bank reconciliation to ensure that all cash is properly accounted for. You should ensure that all transactions on your bank statements have been recorded in your books. Also, make sure that the balance on your statement matches the one in your books. You should know the amounts of any unpresented or uncleared checks (cheques), which will help you to understand any difference between your statement and the account in your ledger.
  7. Also, ensure that all petty cash has been counted and agreed to in your cash book.
  8. Routine counts of items in stock should be done. Ensure that the inventory on your books matches the inventory on the shelves. As unexplainable variations can often be due to spoilage, quality defects or returns, this is an area that requires strict control. This area is crucial as any deviations will need to be shown in financial statements. They can also directly affect the profit line.
  9. A Fixed Assets Register should be kept. Although not an actual ledger, a fixed asset register is vital to track essential business equipment. This includes the cost, location, depreciation, purchase date, and remaining life. These assets are included in your balance sheet. You may be surprised at how many things you never knew you had gone as you age. Even small, high-value technology.
  10. These small business bookkeeping suggestions will help you keep your books organized. However, it is important to remember to make the most of the information within your books. You manage your cash flow, suppliers, debtors and inventory/stock to stay in business. This is called working capital management.

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We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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