Bookkeeping is not why you got into business. Although keeping track of what’s coming in and what’s going out is probably the least exciting part of what you do, it’s also probably the most important. The Achilles heel of any business could be its inability to keep track of its books — and therefore not have an accurate picture of its finances.
Follow these steps to make bookkeeping less of a nightmare.
Do it Daily
There are few tasks more daunting for any entrepreneur than staring at a looming mess of bookkeeping work that absolutely can’t be put off for another moment.
Letting it pile up creates an insurmountable task at the end of the month when it’s so easy to just put in five minutes a day — or week, or whatever your normal invoice cycle happens to be — to avoid a backlog. It’s easy to blow off until “tomorrow” because, for a while at least, you can. Consider it part of your job, because it is.
If you’re a blogger, put the same weight on keeping up daily with your books as you would on updating your site’s content. Not only will you save yourself a headache later, but you’re much less likely to make mistakes when transactions are fresh in your mind.
Revel in Receipts
If you’re in business for yourself, you must become fanatical about keeping receipts and records. Come tax time, your ability to produce itemized receipts could mean the difference on whether or not you save big bucks on write-offs.
The old shoebox of paper is fine if you don’t have a lot of receipts and you’re organized with the ones you do have. If you’re a bigger operation, seriously consider electronic organizing. You don’t need to buy any fancy or expensive scanners or software. When you buy anything — and that means anything — that might be related to your business, get in the habit of photographing the receipt before you leave the store.
Keep ‘Em Separated
If you have a business, you need a business account. Period. It doesn’t have to be a corporate account with its own line of credit, but you must open a separate bank account — a no-frills online account will do if you don’t have a cash business — in which money only made from your business comes and goes.
Your money from your business must be kept separate from any other income you make and any personal expenses. With this debit card, you will make your business purchases and PayPal transfers. When the landlord comes knocking, it’s fine to transfer what you need out of the business account into your master account, but your business profits need their own bedroom.
Keep it Simple
When it comes to bookkeeping, less is often more. Major corporations, of course, have all kinds of considerations and special circumstances that require armies of tax specialists and attorneys for them to accurately keep their books.
If you’re in business for yourself, especially if you’re a sole proprietor, you have the luxury of keeping it simple. Get software, but not more than you need. In fact, many free, Web-based programs like Outright don’t even require you to download an app. You just log in to their Web page and do your bookkeeping there — for free.
The difference between a successful business and a failure often lies in the business’s ability to keep their books straight. Whether you’re a chef, a fisherman, or a blogger, absolutely no entrepreneur chose their craft and took the risk of working for themselves because they like counting beans, and although bookkeeping is necessary, it doesn’t always have to be daunting.
About the Author:
Andrew Lisa is a freelance writer living in Los Angeles.