Every small business owner has to be concerned about bookkeeping and ways to keep track of data. Without a solid recordkeeping system in place, financial details can easily slip through the cracks and get lost. A good system allows the business owner to visually see where money is coming from and where it’s going – without having to dig through records or files. Staying on top of the business cash flow can result in better profits and fewer worries.
Keeping accurate records can help ensure the success of your business.
Financial Ups and Downs
A quality recordkeeping system involves more than simply tracking what has happened. It also includes planning.Whether the business is seasonal or not, there will likely be times when profits are higher than others. Plus, there will be times when the business will need to make major purchases. For example, on average, the typical computer needs to be replaced every three to five years.
Planning ahead for these ups and downs and major purchases can make budgeting easier. It also means the business will be less likely to have to take money from one area to use in another when a major expense comes along.
Document All Expenses
Although not all expenses are tax deductible, many are. When expenses are documented those that are tax deductible can be noted on tax forms. Tracking expenses allows businesses to easily find savings and spending opportunities. For example, a business may find that an exorbitant amount of funds are being spent on entertainment and there is a need for new office equipment. In such a case spending adjustments can be made. In order to simplify this, it is advised to use accounting tool such as QuickBooks. Learn more about QuickBooks Accountant Hosting from Cloud Desktop providers.
Deposits
Keep in mind that all deposits are not necessarily income. This is important because the business will need to pay taxes on income but not on some other deposits made. All deposits should be carefully documented to include a payment source or reference. This will make things easier at tax time. It’s always wise to plan ahead for taxes.
Planning ahead for tax time will make it less stressful.
Invoices
Keeping a close watch on money that is due is important. When funds arrive late or go unpaid, your business’s cash flow suffers. Setting up a process for reminders and late fees is a good way to encourage on-time payments. It’s also a good idea to have a plan in place for customers who do not meet payment deadlines. The more accurate and detailed your recordkeeping system is, the easier it will be to make decisions about things like business expansion and new equipment. Plus, a solid recordkeeping system will allow the business owner to determine which costs are providing a true return on investment and which are actual expenses that could possibly be avoided. In other words, detailed financial recordkeeping can be essential to planning the success of a small business.
Debbie Allen is a professional blogger who lives in Louisville, KY.
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Image courtesy of Vichaya Kiatying-Angsulee at FreeDigitalPhotos.net
I live in a small Georgia town that you most likely have never heard of and I LOVE it! My house is more than full as I am a single mother of four & caregiver to my aging mother and uncle. Lover of all things Outlander. Goes to the beat of her own drum woman.
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When I had my landscape business I always used Quickbooks ..the program was a little pricey at first but the amount of time it saved and the fact that it could do payrooll and taxes too was priceless.
I agree with Crystal. QuickBooks is an incredibly powerful tool for small business owners to manage their books. In fact, many business owners don’t even know that they can export their data from QuickBooks into excel and use the figured as a cash flow forecaster. This can help plan budgets for the short term as well as look for ways to increase revenue.