Tag Archives: small business bookkeeping

Managing Cash Flow in Small Businesses

Managing cash is the foremost task of any small business, simply because no business can carry on without cash. Here are some simple things you can do to ensure that your business always has a positive cash flow.

  • Pay Attention to Your Bookkeeping– Small business bookkeeping makes sure that you have your finger on the pulse of your business at all times. You should make it a habit to reconcile cash daily or at least weekly. If you do so, you will know where you stand financially and can take adequate action when necessary. Timely small business bookkeeping will also help you make informed business decisions that are sure to help your business turn out more money.

Small Business Bookkeeping

  • Collect on Overdue Payments– You know how much of a drain overdue payments are on your business. Managing unpaid payments effectively is important to keep your business healthy. Make sure you have a strict receivables management policy in place and routinely follow up on overdue clients. Having a proper follow up schedule is important if you want to see anything of the payments due to you. Persistence and planning is vital in collection efforts.
  • Forecast Future– Most businesses see a pattern in cash flow trends, mostly seasonal. As a business owner, this can be very useful in predicting cash flow and consumer behaviour and planning business action. And what’s the best way to identify these trends? Your small business bookkeeping of course. Your books are a treasure trove of financial information and you can easily decipher it if you set your mind to it.

Managing Cash

No business can function without money; money is the backbone of every business and as a business owner, you need to be able to understand the money and how it enters and leaves your organization. Though it might seem to be a terrifying prospect, it is not really- all you need is to be dedicated to the cause. Once you get a hang of small business bookkeeping, you will have a better understanding of your business itself.

How Do You Know If You Are Ready For Online Bookkeeping Services

Doing business today is a lot easier today than it was a couple of years ago, but it is also more complicated. While bookkeeping and accounting has become easier to handle, they are also complicated because you have to figure out how to get it done, decide which way to go- keep things in-house, outsource or hire contractors or part time employees. To top it all off, you have to make sure you are always one step ahead of your competitors. Yes, it is not easy, but identifying whether you are ready for online small business bookkeeping services is not that difficult; here is how you can figure it out.

  • All of Your Employees Don’t Work Out Of a Single Office– Thanks to technology and the internet, most companies no longer need their employees in a single office. Maybe you have multiple offices, maybe you offer different work options; whatever the case, if your company engages employees in different situations, outsourcing will fit in just fine into your design.

Small Business Bookkeeping

  • Your Business Uses Cloud- based Services– If your business already uses cloud- based services, online small business bookkeeping services will fit right in. Outsourcing bookkeeping is also a good option for companies that are just about considering moving into cloud- based services as well.
  • Bad Experiences with Bookkeepers– Numerous businesses have had bad experiences with bookkeepers. If you seem to be just burning through bookkeepers, maybe it is time you consider outsourcing to small business bookkeeping services. Not only will you receive professional services, you will also have access to a number of experienced bookkeepers and accountants.

Online Bookkeeping Services

  • You Are Worried About Security– If you are worried about data security and rightly so, online bookkeeping services are your safest bet. Not only do such companies invest in the best data security systems, they also have a reputation to maintain which means they take their job very seriously, which obviously means your data is safe.
  • You Are Scaling– If your business is growing steadily, it will reach a point where you and your hired team will not be able to manage it. Online small business bookkeeping companies, on the other hand, are built to handle such scenarios, which means they can scale as well without you having to worry about hiring or training new employees. It is a win- win situation.

Do You Need a Business Credit Card?

We love credit cards, don’t you? They make buying stuff so much easier. Just whip out your credit card and shop, shop, shop! But when it’s time to clear the payments, we hate credit cards; simply because you ended up buying more than you needed. Now that’s on the personal front; what about business credit cards? If you run a small business, do you or do you not need a business credit card? Let us find out.

  1. Do You Make Frequent Business Purchases?– If you find yourself making business purchases on your personal credit card regularly, it is time you get a business credit card. Bookkeeping and accounting is also easier with business credit cards as these cards can be linked to your small business bookkeeping account and purchases updated immediately.

Business Credit Card

  1. Do You Want To Build Credit For Your Business?– Some credit cards will report your account to business credit bureaus, so if you want to build credit for your business, this is an option. Thoroughly research banks and their credit card options for small business bookkeeping, choose the right card and build credit for your business. Personal credit cards cannot build credit for businesses.

Small Business Bookkeeping

  1. Do You Want To Calculate Interest On Business Purchases For Tax Deductions?– Interest charged on business purchases is tax deductible. Calculating interest on business purchases for tax purposes when using a personal credit card is not easy. So if you would like to make the best of the tax options available to your small business, it would be a good idea to get a business credit card.

Credit cards are a boon and a bane, but they go a long way in making life easier for business owners and for small business bookkeeping purposes. If you feel it is about time you got a business credit card, well go right ahead and get one; but be careful how you use it especially if you have a history of overspending.

Building a Thriving Small Business

Launching a business is no small feat. From planning to executing and opening your dream business, it is a mad race but you are driven by passion. Unfortunately, or fortunately, it doesn’t end there; growing and sustaining a successful business is even tougher and at this stage, passion is not enough. However, if you remember a few simple things you will be able to build and sustain a thriving business.

  • Choose the Right People– Surrounding yourself with the right people is important. You cannot run your company alone; you need people you can trust to share tasks with. You also need people who will give you honest feedback, people who can inspire positivity and possibility. Be careful what kind of people you choose; the wrong kind can ruin your business and you.

Small Business Bookkeeping

  • Be Prepared– Being prepared is a crucial part of business planning and execution. You need to have a clear idea of what you plan to do, how to proceed, how to handle small business bookkeeping, payroll and other non- core business functions and a thorough understanding of the market. You also need to be mentally prepared to face anything that comes your way, to face challenges and obstacles head on.
  • Make Time to Think– Being busy all the time is not good, because it indicates that you don’t have the time to think. Thinking and planning are essential ingredients in the formula for a successful business. So make good use of the 24 hours you have at your disposal; take help, outsource tasks like small business bookkeeping and IT and find time for your family, for yourself and your business.

Small Business Bookkeeping

  • Honest Self Analysis– Do not ever make the mistake of falling for all the praise that you hear about your business. You need to constantly analyse yourself and review your business to understand where you stand. Set high standards and strive to achieve them. First time entrepreneurs are most susceptible to corruption from fame and adoration.
  • Learning from Failure– Failure is never the end; as an entrepreneur, you will have to face many failures before getting it right. Failure is correctly called the stepping stone to success. Don’t lose heart when you face failure, instead take heart. Learn from your mistakes and prepare yourself for greatness.

Building a successful business is not easy, whether it is a small business bookkeeping business, a website or business development company, but it is not impossible either. Believe in yourself and your idea, work towards your goals and you will never regret it.

Tax tips for Small Business Owners

Taxes are scary; this is true irrespective of whether you are a small, mid- size, or large business. It is complicated and time consuming, which is why most business owners prefer to use the services of tax professionals or software. Smart move, however small business bookkeeping gurus say that as a business owner, it is always in your best interests to have a basic understanding of taxes. One reason to learn more about your taxes is that you can figure out ways to save money spent on taxes, legitimate ways of course.

  1. Home Office Deductions– Most small business owners run their businesses out of their homes, but they hesitate to claim home office deductions. Why? Simply because they are not sure if they will be able to pass an audit. It is quite easy actually; here is what you can do to prove that you have a legit home office.
  • Maintain up- to- date and well kept records. Invest in a small business bookkeeping company if you need help with your books.
  • Maintain separate office space, that isn’t in any way used as personal or family space.
  • If you have only one computer at home, auditors might not believe that it is solely meant for work. You can either maintain separate computers or not have a computer in your work area.

Small Business Bookkeeping

  1. Technology Deductions– Science and technology is changing the world. Every day there is something out there that demands your attention, that promises to make your work quicker and more efficient, including small business bookkeeping. Science and technology is changing the way businesses work, fortunately the government also understands this, which is why under Section 179 of the tax code, expenses for equipment like computers, business software etc are tax- deductible up to a certain amount. The amount varies every year, so make sure you check Section 179 come tax time.

Tax Deductions

  1. Travel Deductions– A growing business often requires travelling for conferences, investment meetings; all directly linked to the development of your business. So while your travel costs for business trips are tax- deductible to a certain extent, you need to remember the following-
  • Food is only deductible up to 50%.
  • While you can take your family, only your costs can be calculated for tax deduction.
  • Only conferences that are directly useful to your business or industry will be considered for tax deduction.

Never forget the golden rules of small business bookkeeping- maintain up- to- date records and store away all your receipts and invoices. Taxes and audits are unpleasant, but are essential and in your best interests. So fill your taxes on time, maintain well organized records and you will have nothing to worry about.

Expand Your Business! Are You Sure?

You start off wanting to run your own small business, but what you are actually dreaming off is the day your small business becomes a big business. Nothing wrong in being ambitious; in fact that is the only thing that will get you through in the cutthroat world of business. The thing is in the hurry to expand their business, most business owners don’t take the time to actually analyse whether they are ready to expand, whether the business can keep up with the demands of a growing customer base. From your small business bookkeeping to your inventory, everything needs to be in order. So how do you know whether your business is ready to expand? That is what we will cover today.

  1. Where Does Your Business Stand Today– Now this is to be done in the light of your first business plan, so obviously your business plan is the first document you should consult when you think of expanding. You will then know where your business stands operationally and financially, whether it is performing as expected. Examine your decision to expand in the light of all this to understand if you can handle it.

Small Business Bookkeeping

  1. Do You Need To Open Another Office– If your current office is getting more business than it can handle, it might be a good time to consider expanding. Now whether you should open a new office or not depends on a number of things- whether your current office has sufficient space, whether your old customers will find a new location convenient or inconvenient, whether delays due to increased demands will frustrate your old customers and result in you losing them. Think carefully before you make a decision.
  1. Do You Have the Money– Now who would think of an expansion if they don’t have the money; you will be surprised at the number. Existing debts, pending payments- the thing is you will find that you need hard cash and not credit for numerous things, so it will not do if you don’t have the money to use if needed. Make sure your small business bookkeeping is in order.

Small Business Bookkeeping

  1. Do You Have the Right Personnel– A very, very important question; your business is only as good as the people you have. You need people you can rely on running the show so that you can focus on setting up the new part of your business. Whether it is the bookkeeper handling your small business bookkeeping or the foreman, you need people you can trust.

Watching the business flourish is what every business owner dreams of, but if you are not careful with your choices and their timing, you will end up watching your business plummet.

Do You Need a Freelance Bookkeeper or Bookkeeping Firm?

Any business decision pertaining to bookkeeping and accounting is a major one. Do you do your own bookkeeping? Should you invest in an accounting software? Should you outsource your bookkeeping? These decisions play an important part in determining the success and growth of your company. Let us say you decide to outsource your bookkeeping, then the next big question is do you hire a freelance bookkeeper or a bookkeeping firm. Who do you work with?

Freelance Bookkeeper or Bookkeeping firm?

The truth is that this decision depends on your business- how it functions and what your needs are. One size doesn’t fit all. Let us explore how the two setups are different and decide whether you need a freelance bookkeeper or bookkeeping firm.

  1. Cost– Money is an important factor in making this small business bookkeeping decision. Freelance bookkeepers offer lower rates than a firm. This is simply because they generally work from home and hence have lower overhead costs. A firm, on the other hand, charges higher due to higher overheads and also as they provide you a variety of services with access to more personnel. On hiring a firm, you have access to much more than just basic bookkeeping services.

small business bookkeeping

  1. Work Arrangement- Freelancers are free to travel and willing to work from your office if needed, except that it might cost you more since you will have to arrange for office space. Some freelancers also offer virtual bookkeeping services. Similarly most firms also work remotely with their clients, making things a lot easier for all involved.
  1. Work Schedules– Most freelancers work for multiple companies, so they schedule their work accordingly, ensuring that the books for each client is accurate and up-to-date and that deadlines are met. Unfortunately, this dependency on a single bookkeeper can mean that when your bookkeeper is on leave or sick, you have no one to turn to. Also come tax deadlines, your freelancer is going to be really busy. However when working with a bookkeeping firm, even if your bookkeeper is not available, there will always be a backup bookkeeper. Another huge advantage of working with a firm is that due to the large number of bookkeepers available, you will be able to find someone who has worked in your field or at least something similar. The chances of you finding a bookkeeper who understands your needs is also a lot higher with a firm.

freelance bookkeeper or bookkeeping firm

  1. Knowledge and Expertise– Everything is in vain if your bookkeeper doesn’t have adequate bookkeeping knowledge and expertise. The thing with freelancers is that there is no one to regulate them. Everything depends on your bookkeeper’s knowledge and expertise- he could be a beginner or have 10 years of experience. Whereas in a firm, you will have access to people with a range of expertise and knowledge. Always ask around and research on the firm or bookkeeper before taking the final call.

So what will it be? Think about what your small business bookkeeping needs. Think about what each has to offer and decide- freelance bookkeeper or bookkeeping firm?

5 Affordable Employee Perks for Small Business Owners

Small business owners often have a tough time retaining employees. While some employees are satisfied with working with a company that treats them like family and allows them to grow, others want better salaries and more perks. Small business owners often trouble offering competitive salaries while they are waiting for their business to lift off and deliver profits. So what is the next best thing that they can offer? Affordable, yet effective perks that can make employees happy.

Studies have proven that happy and satisfied employees are more effective and productive than unsatisfied ones. So here are 5 effective employee perks for small business owners to improve employee morale and performance.

  1. Organize Free Team Lunches Once a Month– Who doesn’t love free food? Organize a lunch once a month for your employees. Such occasions gives all of you, employees and employers, a chance to interact with each other, get to know each other better, relax together and builds team spirit; something that is very important for the success of a company, as much as small business bookkeeping.

Small Business Bookkeeping

  1. Get Your Employees Smartphones– This perk is not as expensive as you fear; there are numerous service providers with special plans for small businesses on the purchase of a smartphone contract. Good small business bookkeeping can help you find a way to make this happen. Offering smartphones to your employees not only makes them happy, but also gives you a means to contact them when needed. You can also install apps that are relevant to their roles so that they can work on the go if needed.
  1. Provide Employees with an Option to Work from Home– When you let your employees work from home, you tell them that you trust them. Plus it is probably the cheapest perk you can offer. Working from home means no commuting, no rushing through chores in the morning, thereby giving you less stressed and happier employees. You can offer good employees an option to work from home 1-2 days a week and also allow them to choose the days. What do you have to lose? Instead you gain your employees’ respect and more productive, efficient employees.

Employee Perks for Small Business Owners

  1. Flexible Days Off and Vacation Time– Be flexible with your employees’ days off and their vacation time. Don’t be stingy with their personal days. Doing otherwise is a sure shot way to lose employees by the dozen.
  1. Offer Full Health Insurance Benefits– As an employer, this is the best thing you can do for your employees and will earn you their loyalty. I know that most small business owners feel that this is an expensive perk, but there are a number of reasonably priced plans available on small business networks.

Categorizing Small Business Transactions

Whether you handle your own bookkeeping, hire a bookkeeper or outsource it, you need to be able to understand your books to keep your finances under control and to make good business decisions. One of the first things you need to achieve this is basic understanding of business transactions and how they are categorized.

For small business bookkeeping, all business transactions have to be recorded. Noting the type of transaction is important to identify where your business stands- are you making money, are you losing money, where are you losing money, how much cash do you have in your account- all of this can only be determined by analyzing your business transactions. So let us take a look at the most commonly used terms in categorizing business transactions.

Credit– Any cash that comes into your business from somewhere, it could be a sale or fees, is technically a credit.

Stack of $100 bills

Debit– The opposite of credit, debit is any cash that your business has to give someone else, like rent or fees.

 

Journal– The record of all your credits and debits is referred to as the bookkeeping journal and the entries made in the journal are your journal entries in small business bookkeeping.

bookkeeping for small business

Account and Account Types– Pretty sure you know what an account is- it is where your money comes into and goes from. There are 5 different types of accounts from where the money flows. Understanding these accounts can help you understand your books better and categorizing business transactions.

  1. Assets- Anything that your business owns is an asset. Asset can be physical- equipment, property, inventory, cash or intellectual property. It can also be anything that promises returns in the future like a loan or an agreement.
  2. Liabilities- Any loan that your small business takes out or money that has to be paid is a liability.
  3. Equity- This refers to money that comes from the owners and is usually never expected back. There are different types of equities as well.
  4. Revenue- Revenue refers to income that is collected from customers. Revenue means increased equity.
  5. Expense- An expense refers to all cash payments made out for the purpose of keeping the business afloat like payroll, infrastructure costs etc.

Categorizing business transactions can sometimes be confusing and can take some time to get a hang off, but once you begin understanding the purpose behind each transaction it will be easy.

7 Basic Bookkeeping Elements for Small Businesses

Bookkeeping and accounting are probably the bane of every small business owners’ life; don’t like them but can’t do without them. As annoying as the tasks are, they are critical for the sustained growth of your company. Without small business bookkeeping, your business will never reach its full potential; besides you have the IRS to answer to.

Small business bookkeeping is really not that difficult. One of the first steps to get a hang of bookkeeping and accounting is to understand its common aspects, so here are some basic bookkeeping elements explained for you.

  1. Accounts Receivable- This refers to money that you are due to you, or that you should receive from clients and customers, so it technically refers to a major portion of your income. Sending out invoices and collecting the payments on time are vital to keeping your cash flow steady.basic bookkeeping for small businesses
  1. Accounts Payable- Any money that you owe or money that you have to pay is Accounts Payable in small business bookkeeping. Keep track of your Accounts Payable, pay your bills on time and accurately. This goes a long way in maintaining your business’ good will and to ensure you don’t make the same payment twice.
  1. Inventory- All the products you have in stock is technically money on a shelf, so keep careful track of your inventory. Make sure you have regular physical checks to ensure the count is correct and also to ensure that the quality of your inventory is not compromised.
  1. Revenue- Which businessman doesn’t love this word; after all it is the purpose behind starting a small business in the first place. Record all your sales so that you always know where your business stands.small business bookkeeping
  1. Payroll Expenses- This is probably the biggest cost for small businesses and big ones. Make sure you record the expenses accurately and pay your employees on time. This is also essential for tax purposes and to satisfy government reporting requirements.
  1. Taxes- Maintain up-to-date and accurate records and preparing and filing your tax returns will be a breeze. This will also reduce your chances of underpaying or overpaying your taxes, thereby ensuring good small business bookkeeping.
  1. Cash- Now this of course doesn’t require any explanation, but no list of bookkeeping elements is complete without mentioning cash. The money in your account is your cash. All cash transactions pass through the cash account and are tracked as Cash receipts and Cash disbursements. This is the lifeline of your small business.