6 Bookkeeping Habits for Entrepreneurs

As an independent business owner, keeping accurate tax records should always be a part of your bookkeeping habits. It’s also essential to your success. Poor accounting can lead to financial loss, poor cash flow and even tax penalties and implications.

Whether you choose to handle the bookkeeping side of the business yourself or pay to outsource it to a responsible accountant, you simply cannot operate a successful business without having a strong handle on the financial side. Here are some important facts to consider and habits you need to adopt that will simplify the accounting side of your business.

1) Have an Active Hand in the Accounting Process

If you choose to outsource your accounting to a professional, you still need to take an active role in some of the basics of your business accounting. It is essential for you to review income and expense reports to take notice of changes in profits and expenses. It is also important to keep a watchful eye on things like accounts receivable and payable.

2) Hire a Professional Tax Accountant

Hiring a professional to prepare your taxes is not only a huge time saver, it can also save you a considerable amount of money. You created your business to focus on its core model, not to have to prepare financial reports and sit down with a tax accountant each year. When you outsource accounting and tax preparation, you get to focus exclusively on your business model and not worry about the finite details.

Professional tax accountants not only prepare and file your returns, they can also quickly and easily pick up on ways to maximize your deductions so that you get more money back in your pocket each year. A trained tax professional will also offer suggestions and tips for simplifying your accounting process; this will save you more time and money throughout the year.

3) Invest In Good Quality Accounting Software

This is one area of your business where you do not want to cut corners. Using an accounting and invoicing software should be part of your top bookkeeping habits. There are a lot of good-quality accounting software programs that track everything from taxes to accounting, expenses, and profits with ease. Accounting programs used to be catered exclusively to accountants and tax professionals. Modern bookkeeping software programs can be purchased and customized to suit your individual business needs.

You will want to look for an accounting program that is thorough and complete, without being too complicated to master; this is especially important if you will be overseeing the accounting side of your business, and you are not a professional accountant. A good accounting software program will simplify the financial side of running your business. With a few simple clicks and inputting a few numbers, you can generate bar graphs, charts, and detailed expense reports.

4) Keep Expense Receipts for Every Single Transaction

It is relatively easy to keep track of expenses when you are making business-related purchases on a credit card. Cash transactions can get lost in the abyss if they are not being tracked properly. This means you are leaving money on the table when it comes to filing your taxes each year. You should keep a small notebook in your office and company vehicle to log any cash expenses as they incur. You will be much more apt to track the expenses if you have quick access to a notebook and pen to jot them down.

There are also a lot of great accounting software apps that allow you to take pictures of your receipts and take notes on cash purchases. It stores them safely within the app, and many also offer a backup option. That way you can use a laptop or cloud for safe keeping if something were to happen to your phone.

You should also purchase a cash receipt booklet if you tend to do a lot of cash-based transactions. Most receipt booklets have ample room to notate transaction details, totals and signatures if needed. A cash log book is great for people who travel a lot for business or have an inventory-based company.

5) Track Your Receivables one of the Bookkeeping Habits

It is not enough to simply keep track of your invoices. Many successful businesses run into issues when it comes to tracking the receivables side of the business. The issues arise when the invoices are tracked but are not marked as paid. An up-to-date log is essential for determining whether an invoice was partially paid or was paid in full. You should also be keeping track of payments that are made on time or late.

Many invoicing services like Invoicebus keep track of all receivables and will send your client alerts when an invoice or payment becomes overdue. This makes it so easy to generate reminder emails or set aside time to call your clients directly as it pertains to late payments. So make sure you make this one of your bookkeeping habits.

6) Change the Way You View Your Accountant and Tax Preparer

Many entrepreneurs view their accountants and tax preparers as another expense. And they only touch base or meet up during tax time or when it is time to prepare the quarterly income and expense reports. Your accountant and tax professional should be viewed as a business partner, and you should aim to integrate them into the financial side of your business. With this type of inclusive approach, accountants and tax professionals can offer invaluable insight and advice on ways to simplify your processes, maximize profits and reduce costly business-related expenses. In many cases, a professional accountant or tax professional can also spot financial, tax-related and business mistakes before they arise.

Conclusion

While some entrepreneurs may view the financial side of the business as mundane and time-consuming, other business owners enjoy taking a hands-on approach to the accounting and tax preparations. No matter which category you fall into, it is essential to have the proper software programs. Also, you should have team members in place to help you dissect all of the important financial-related business matters.

When you stay up-to-date on your records, profits, and expenses, you reduce your stress. And you have a greater handle on how your business is performing. Investing a little bit of time each day to input numbers and jot down transactions saves many days and weeks of a headache during tax time. If you neglect the financial side of your business throughout the course of the year you’ll certainly run into problems. So make sure you employ these six bookkeeping habits for your business good.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
Let's be inbox friends!

Let's be inbox friends!

Drop us your email to receive a weekly digest of our latest blog posts right in your inbox.

To confirm your subscription, please check your email.