Badly tracked finances can cause your business a world of problems—from poor cash flow to improper tax filings and beyond. These kinds of problems can put a young business at serious risk.
Good bookkeeping habits, on the other hand, can help a business thrive—and not just survive.
1. Get professional help to prepare tax returns
Business owners are pulled in a dozen different directions. That’s why it makes sense to outsource work you don’t have the expertise or time to do. If you’re like many entrepreneurs, you likely went into business to pursue a passion, not to become an accountant.
Professional accountants can do more than just ensure your returns pass muster. A trained financial eye can spot ways that your bookkeeping processes—and perhaps your business itself—can be improved.
2. Don’t go entirely “hands-off”
Outsourcing your bookkeeping doesn’t mean you should leave it entirely to somebody else.
No matter your level of accounting expertise, it is beneficial to your business for you to understand as owner some of the basic business numbers, including profit, trend in expenses, accounts receivable, profit per customer, and how your client funnel works.
3. Get the right software
There are many different options out there, so look for a system that best meets your business needs—and one that you’ll actually use. If you’re not an accountant by training, then avoid systems that require a telephone book sized manual to get started.
4. Document your processes
Consistency is key for good bookkeeping and can help you spot errors later on, since you’ll have a good idea of what may have gone wrong.
5. Keep expense receipts
You can’t know how much you’re spending on your business if you don’t keep receipts. This is somewhat straightforward for credit card purchases, since you’ll have both receipts and monthly statements against which to check them.
6. Track your receivables
It’s one thing to issue invoices, but it’s another to ensure your invoices are paid. Keep up-to-date logs of your invoices and the status of each—sent, received, paid, partially paid, and late.
7. Ask your accountant how you can work as a team
Business owners often look at their accountants as just another expense, and only visit during tax crunch time. A trusted accountant, however, can be a key ally in your business, helping to guide its path to success, shaping it to provide better returns, and helping spot potential issues in the business before they arise.
Entrepreneurs should approach their accountants as business partners, not just tax prep, and find someone who can offer insight into the business. A great accountant can help take a business to the next level.