Aside from taking care of your business, you will probably take on a lot of additional tasks as a small business owner. Tasks for the infancy of your business such as bookkeeping is usually one of the tasks you should take on.
As you find your way through the hoops and loops of bookkeeping, you might find it easy to pick up bad habits especially if you are not a bookkeeper by nature or by trade. There will be financial incrimination that will cause problems for you or your business if you will do bookkeeping poorly and if you pick up bad bookkeeping habits.
How can you avoid some common bookkeeping bad habits?
1. Regularly update your books
This sounds very easy and simple but a lot of business owners failed to do so. Do things start going wrong in business? Not keeping your books regularly updated might be one of the reasons. It is also a fact that doing this can be very time-consuming. It will be harder to keep track if you don’t update your books regularly.
You won’t be able to see what is happening financially in your business if your books are not up to date. This could cost you way more than you think since this could lead to missing up or downs in your business. To keep on top of your books, it is really important to set aside time regularly.
2. Be mindful and keep track of dates
As a business owner, a high chance of preventing getting sidetracked with ‘happenings’ within the business and miss a deadline if you keep a good track of dates. VAT submissions (especially with Making Tax Digital), invoicing dates, chasing payments, and when bills are due are some of the dates you should keep track of with bookkeeping.
Give yourself plenty of time to sort any additional paperwork, write all dates down on a calendar or it might be better to set a digital calendar reminder.
3. No matter how small the transaction is, record it
Over a year, small transactions can add up. They can be often treated as unimportant and can be overlooked to worry about for now. No matter how small it is, you should keep a record of every transaction you make.
Your books will not be balanced when it comes to the end of your books if you don’t account for small transactions here and there. You will have difficulty determining which portion of your income is gone. You need a record of every incoming and outgoing to fully understand how your business is doing financially.
4. Every bill or invoice sent should be tracked
You may be abundant with the number of customers you have and maybe fantastic at the work you do. But your cash flow will be affected when any of your customers don’t pay on time. Your cash flow will be more affected than your company will cope with if too many of your customers don’t pay on time.
To keep your cash flow constant and keep money coming in, it will be a big help if you chase any late payers promptly and keep track of your invoices.
If you provided the goods or services at the agreed price they need to pay and at the agreed time, you should not be afraid in chasing them especially if they owe you money. Remember that there is nothing personal, it is complete business.
5. Reconcile Your Accounts
In order to see and make sure everything matches, you need to cross-check your books with your other financial records or you need to reconcile your books on a regular basis.
Any missing or error transaction can be found easily if you will do this regularly.
6. You should develop the habit of regularly checking your financial reports
You can always see the reporting functions in every bookkeeping or accounting software you use. But there will be no point in running the basic report regularly if you don’t check them.
There is a lot of information you can get from the report that might be useful for you when making decisions about your business.
You can consider hiring a bookkeeper if this is just for you or if you don’t have the time. To the even smallest business, outsourcing your bookkeeper can be very beneficial and cost-effective. That way, your bookkeeper can focus on your books while you can focus on your business.
