The lack of proper bookkeeping system often results in facing a plethora of business-related problems such as improper tax filings and poor cash flow. If you are a small business owner, these problems can put your company at serious risk. For every business to thrive, good bookkeeping habits are essential. Here are 5 good habits that can protect your business and keep you in the right direction.
When it comes to getting the software for your business, you should not skimp on the program or system you use. If you have a good system, your business will not only reduce manual tasks, but also get more tasks done. While you may be confused with all the options available to you, it is important to consider the software that meets your needs. There are programs loaded with features, but this does not mean you can use all of the features. It is also worth considering programs that are user-friendly.
How will you know the amount of money you are spending on your business if you do not keep expense receipts? You may think it is just meager amount, but when the time comes that you need to pay your bills, you will realise that you do not have enough cash flow. You will to check your receipts and monthly statements so you will know how much you are actually spending. Receipts are essential as there are not backup statements.
Every business owner knows it is difficult to prepare tax returns as deductions need to be accurate. You need to be well-trained to ensure your bookkeeping process is correct and will not trigger ATO audit.
Although you may leave most of your bookkeeping task to a professional, it does not mean you should go entire hands-off. You will need to review reports so you will know what is going on with your business. You will also have to ask the right questions to your bookkeeper. You must also understand basic accounting and bookkeeping so you will have an idea about accounts receivable, trend in expenses and more.
Chasing clients can be a tedious task because you need to make sure that all of them have paid their invoices. You will also have to track the logs of your invoices and make sure you have updated the status of each. Tracking your receivables using some bookkeeping solutions will help you find out which invoices are late and unpaid.
Dealing with bookkeeping can be stressful even for a small business owner. You need to ensure all aspects of your business are kept in check. However, you may still have other business obligations that you need to take care that bookkeeping becomes your lowest priority. It may not have a negative effect on your business, but habitual bookkeeping neglect can take its toll on your business. These days, switching over to cloud-based software is no longer a want but a need. This is because cloud technology enables business owners to streamline processes and increase productivity. Here are the known benefits of cloud technology for small business owners:
If you want to get an up-to-date view of your business performance, you need real-time reports. Cloud software makes this possible by making reports accessible to you. If you are in a fast growing company, making informed decisions is essential and you cannot just make decisions without having an access to your financial data.
Generating invoice can be such a challenge when it is done manually. With the help of online invoicing, you can easily keep track of the clients and customers who owe you. There is no need wasting time tracking down late payers because you will be notified once they view your invoice.
So long as your device has an internet connection, you will be able to make use of cloud-based software anywhere at anytime. Wherever you are, you can check your balances, track expenses and much more.
Since cloud technology offers multi-user access, accountants and bookkeepers can work together. Everyone has access to your business files so you can ask questions and even get advice when you need it most. Your accountant will also have the ability to log in and even take a look at number so productive discussion of your financial health and business performance can be made.
In the age of the paperless, it is no longer a challenge to detect any signs of fraudulent activity because it can be detected when you are using cloud software. If you see any suspicious transactions, you can always ask your bookkeeper or accountant about it. These transactions can be easily traced and monitored before they can negatively affect your business. Cloud software makes it easy for you to do this.
Tracking expenses is essential to all businesses and hiring a bookkeeping service is one way to make this task much easier. However, for small businesses, bookkeepers are not a priority because of perceiving bookkeeping as an additional expense. If you rely on DIY bookkeeping, there will be more room for mistakes you may tend to overlook essential information. There are good reasons bookkeeping is a must for your small business:
Accuracy is important when generating financial report and spending time keeping books must also be a priority. A bookkeeper is capable of entering and classifying transactions as part of your pre-tax planning. Bookkeepers will also check your books regularly so you will not worry about payments come tax time.
There are many problems associated with DIY bookkeeping such as failing to focus on other more important areas of your business as you are stuck in entering transactions into your ledger. If you let bookkeeping professionals take care of this task, you can save yourself from spending too much time on keeping books. These professionals have a sound knowledge with bookkeeping software and you will not also miss other great opportunities.
Whether you are a sole trader or in a partnership, it is important to note that as your business grows there will be additional tasks that you need to handle and one of which is payroll management. This is one aspect of running your business that you should not ignore. It includes creating checkes and making sure that income taxes are deducted correctly. You cannot afford to make mistakes. This why hiring a bookkeeper is important when handling payroll.
It is easy to overlook bills when you are busy. Paying your bills may be a simple task, but it is mostly one of the obligations often forgotten. It can result in major and costly consequences. If you hire a professional to remind you of upcoming payments, late payments will no longer cause problems and worries. You just need to give access to your online accounts so the bookkeeper can check statements and even make payments online.
Many small business owners are not completely aware of their true financial state. This is because they do not have access to the financial reports. Bookkeepers must make reports available to business owners on a bi-weekly basis so business owners will know how their business is doing. Reports also provide an idea where business stands. Problems are also prevented when financial reports are regularly checked.
Bookkeeping may appear to be a small contributing factor to the success or failure of your business, but since keeping books involves keeping your cash flow in check, knowing you have enough money on bank to sustain the growth of your business gives you greater peace of mind. There are business owners who remain complacent about their business because of the profit obtained. However, a profitable business does not guarantee a steady flow of cash. Profit and cash flow are separate entities. So how can bad bookkeeping hurt your business?
Small businesses need to borrow money from creditors to keep the company alive. Once approved, you need to make sure that you have the ability to repay debts in a timely manner or as agreed. Only a savvy bookkeeper will enable you to pay your debts without shouldering late fees and interest rates. Credit problems can cause you to settle for less favorable payment terms and suffer the loss of credit. It will be difficult for you to regain the trust of your suppliers and vendors if this happens because you failed to keep an accurate record.
Keeping track of your cash flow is also your bookkeeper’s responsibility. You should know when your receivables will arrive and when your bills should be paid.
Improper deductions and late or unpaid taxes are reasons why small businesses are faced with legal problems. If your funds are not enough to pay creditors, there is also a great possibility that you will be sued especially if your bookkeeper is not familiar with tax policies. A good bookkeeper provides annual bookkeeping procedures so you can handle your payroll, sales and income taxes.
If you always miss payments or fail to pay your bills on time, it results in losing access to vendors and suppliers. It is easy to lose sales when you cannot provide the service or products your customers are asking for. If it takes time for your company to deliver goods, this alone can cause your clients and customers to find other businesses that can provide their needs. It will be difficult for customers to go back to you if they have already used a new company.
When you need to reduce debt or increase your marketing, accepting opportunities to grow your business has to take a backseat. This happens when you have less money because your bookkeeper has failed to provide accurate financial reports. If you do not ensure accurate bookkeeping, you will also lose the ability to run your business efficiently.
Business owners, both large and small consider bookkeeping as a major task in keeping the business on its feet. When it comes to numbers, accuracy is important because one wrong entry can result in bookkeeping catastrophe. In terms of making bookkeeping easy, one thing that comes to mind is using some high-end tools. However, with today’s technology, there are many ways you can operate your business without dreading bookkeeping, thanks to these 5 simple but useful tools:
These days, many businesses are using cloud technology because it provides freedom and flexibility to workers. Business owners have the ability to access and edit files on any device with Dropbox or Google drive. They do not need to set an appointment with the bookkeeper because the information they need can be accessed using cloud technology. As compared to using desktop programs, cloud allows you to back up your data safely.
Since the technology offers more flexibility to workers than ever before, it seems easy to get things done without necessarily being physically present. With your smartphones and other mobile devices, you can manage your bookkeeping files anytime, anywhere and of course, on any device. In the past, these devices were only meant for playing games, texting and calling friends or loved ones. At present, many people consider these devices as a clever way to keep track of everything including your bookkeeping files.
You can come across a wealth of information if you are going to visit bookkeeping websites. The ATO for instance, will provide you dates you can lodge payments and file tax returns. The website provides tools such as a tax calculator so you will know the amount you are going to pay. Forms are also available on site.
If you wish to monitor your financial activities or track your business data, Xero, Quickbooks Online and other bookkeeping programs are the way to go. The software will make it easy for you to run your business. You can also minimise the risk of fraud as you can easily spot irregularities before they become a business nightmare. Any changes made to a financial statement can be traced within the software’s transaction history.
If you want to collaborate with your workers regardless of your location, project management software will help you get things done. These tools enable you to track the amount of work done and when they are done. For business owners on the go, the software can help you keep things organised.
The common misconception of small businesses is that they are not required to adapt to technology changes in order to survive. However, no one is spared from digital evolution. In fact, changes happen at the speed of light. Before you can adapt to the changes, the fast-paced technology will unveil another innovation for you to embrace. As enterprise or large businesses continue to search for innovative ways to remain competitive and relevant in the business, small businesses keep on struggling with handling the workload.
This is because they require additional people to get the job done. When automation enters the picture, it seems that small businesses continue to avoid it. They are plagued by the fact that they have to change the way things are done. These businesses are focusing on the perils of this new technology without realising that the good still outweighs the bad.
The first thing that will come to mind when talking about automation is artificial intelligence. Small businesses fear that robots will replace humans when it comes to carrying out tasks. The truth is, automation is a breath of fresh air for these businesses. There are more reasons to love automation than despise it.
How many times have you found yourself doing the same thing over and over again? A task which could have been completed in just a matter of days, may still be the same task you will be doing in the next couples of weeks. These tasks include sending invoice to customers, managing inventory and managing accounting and payroll. If these tasks are automated, more serious tasks can be delegated to employees.
Automation makes it possible to manage virtual teams as you no longer have to require their physical presence when collaborating with them. More often than not, small businesses have employees from other countries, involve working remotely. When you manage teams from across the globe, automation will help you keep track of your the task’s progress. They can easily check their smartphones or any mobile device for updates on assigned task or upcoming meetings.
A small business will never grow without its employees. Automation ensures that your employees’ level of workplace satisfaction is increased. Since automation reduces human errors, it will be easier for business owners to identify employee productivity. There are also some automated tracking tools business owners can use to promote trust and transparency in the workplace. These tools will enable employees to tally the total hours they have worked.
The past years have introduced automation to small businesses. Although there are still a few companies embracing traditional processes, 2016 has been a year of bookkeeping automation. Aside from saving time, you can also reduce stress with automation. You reduce manual processes and keep human errors to a minimum. If you used to spend hundreds of grueling hours for doing tasks such as tax preparation and expense reports generation, these tasks will no longer be such a pain. Babysitting your books to ensure that the information is accurate will be history. However, you need to take note of the essential tasks that should be part of the automation bandwagon.
Small business owners consider payroll taxes as administrative burden. This is because the staff has to spend 10 hours per month managing payroll. That is 120 hours or even more a year. When your system has the ability to calculate payroll taxes, you create paychecks instantly and avoid tax penalties. You can even set Payroll up so you can integrate it with your bookkeeping software.
Taking inventory consumes a large chunk of your time. All of the wasted time can be corrected by automating inventory management. Automating this task can help you generate invoices, pack list, minimise inventory errors, speed up the order process and create sales reports.
Submitting reports on time is essential to every small business owner because missing out on generating expense report can result in creating tax and bookkeeping problems. Automation streamlines the process of expense reporting as employees are given the ability to use mobile devices so receipts are recorded in just a snap. Automation is a time-saver because you can generate reports automatically and even integrate them with your travel booking so you can ensure that your travel expenses comply with your company policy.
If you rely on making a mental note when keeping track of customers who has and has not paid you, oversights can happen. It will result in cash flow problems, which will eventually pose a threat to the company’s financial stability. Keep in mind that cash flow is the lifeblood of your business. If you keep on losing track of your invoices, your company will run the risk of bankruptcy. An automated bookkeeping system enables you to sustain sufficient cash flow. You will also have a detailed record of your invoices so you will know the customers who have already made a payment.
Many business owners consider bookkeeping as a stressful task because aside from dealing with numbers, you will have to make sure that you keep financial reports in check. Although bookkeeping is a least favorite task, it does not excuse business owners from ignoring this one essential task. For small business owners, it is easy to get sidetracked by the goals you want accomplished that bookkeeping often takes a backseat. Although hiring someone to do the job will do the trick, you still need to make sure that the job is done properly. There are 4 signs your bookkeeper is doing a good job.
One thing that can get your business into trouble is when you are clueless about how it is doing. You may have thought it was doing well based on your predictions, but your high hopes vanish into thin air the moment you check your financial reports. It is easy to assume that your company is taking the right direction, but if financial reports are not delivered in a timely manner, you will never see the big picture. A trustworthy bookkeeper has the ability to provide you updated balance sheet and income statement.
A good bookkeeper can take care of invoicing, record-keeping and other tasks associated with bookkeeping. As a result, you will have more time on your hands to focus on other things you deem essential to the growth of your company. A reliable bookkeeper will keep you worry-free as you no longer have to enter data. They will take care of this task for you.
Unpaid bills and taxes can pile up and take a toll on your business. It happens when your bookkeeper does not provide you detailed financial statement and records that will remind you when your bills are due. Aside from reminding you to settle your payment, bookkeepers will also track clients who owe you.
Knowing the financial health and performance of your business is important as this can give you an idea of the goals you need to set. Is it time to move forward or reassess your strategies? When your bookkeeper does a great job of taking care of your financial reports, you will be able to have plenty of time to focus on other important things. You will never have to worry about missing a payment or chasing clients who owe you. Your bookkeeper can also give you recommendations based on your financial report.
Business owners have already witnessed a significant transformation in the industry and these changes will continue to shake up the system in 2017. Whether you are still embracing traditional bookkeeping systems or moving towards a more advanced approach, it is worth knowing the latest technological trends that will make day to day tasks much easier for business owners and bookkeeping professionals.
The cloud technology has made it possible for many businesses to become more fluid than ever. With its ability to provide instant access to users regardless of their location, it now seems easy to collaborate in just a few clicks. Back in the day when businesses rely on hard-drive, it was difficult to change your bookkeeper. With the emergence of cloud technology, switching becomes a breeze. However, moving to the cloud technology is not enough to make a difference. It is also important that your cloud technology provider is also reliable.
As business owners realise the benefits of moving to the cloud technology, bookkeeping professionals must also be flexible. Since this is already the age of the paperless, more and more businesses are expected to move to the cloud in 2017. It is inexpensive and convenient and it provides more flexibility to business owners as they can access the information at any given time.
It cannot be denied that social media has been influential to many people these days. Aside from sharing information, it is also a great venue for collaboration. If you are in the process of building your brand, social media will also be instrumental to raising brand awareness.
If you have a small business, artificial intelligence is going to be a practical application. It is no longer surprising that businesses rely on chat bots to serve customers. A bot is also used for collecting information as it saves time and it is able to assist prospects and existing customers with general queries.
The year will bring efficiency and flexibility to clients as brainstorming becomes possible. While technology has previously paved the way for collaboration to be easier, these changes have no signs of slowing down. They create a positive impact on business owners as they can view income statement and balance sheet without worries. These changes to how bookkeepers work will continue to thrive. Some business owners choose to embrace it while others ignore it.
In the age of paperless where digitisation is as precious as gold, has traditional bookkeeping lost its luster? When the thought of streamlining your bookkeeping processes by going digital, it is easy to cringe at the thought that you will no longer need traditional bookkeepers. These days, more and more businesses are moving towards the cloud because of the benefits they reap from it. Sure it has its own flaws, but the range of benefits still outweighs them.
However, not all companies are ready to embrace cloud technology. There is still a small fraction of businesses more comfortable in using bookkeeping systems the old fashion way. Some business owners are also reluctant to learn about the modern advances in technology that they prefer to outsource the job to someone.
Even if you have not used cloud-based software, this does not necessarily mean you should shy away from it. In fact, it can be a new opportunity for bookkeepers because it reduces errors and promotes accuracy. Even if going digital provides convenience to most business owners, bookkeepers are still required to ensure that essential business information is recorded correctly.
Business owners may have the tendency to join the digital bandwagon without thinking about its implications. While cloud accounting software may sound promising, it does not mean you should completely eliminate bookkeepers from the process. Bookkeepers are not just meant to carry out simple data entry, but clients may view things from a different perspective. As a bookkeeper, it is important to know the client’s pain points to find out how both of you can benefit from cloud technology.
Bookkeepers need to demonstrate how cloud accounting software works. They should also explain to business owners how cost-effective it is to hire bookkeepers instead of doing the process themselves. Training is required to understand the system. There are bookkeeping intricacies that a business owner may need to learn.