1. Separate business and personal finances.
Co-mingling expenses and income is a common mistake in small business bookkeeping—and one that will cause huge headaches for your business in the future. Open a business bank account as soon as you decide to go through with your startup, and get a separate business credit card. This not only separates your accounts, but also helps your business build its own credit rating.
2. Automate whatever you can.
Entering data into spreadsheets and reconciling numbers manually is so old school. Use cloud-based bookkeeping software, and do your business banking online. That way, you can sync your bookkeeping software with your business bank account so you always have accurate, up-to-the-minute records. Plus, with the cloud, your critical financial data is backed up safely off-site.
3. Perform regular financial checkups.
If you put off bookkeeping too long, you end up with bounced checks, overdue invoices or figures that don’t add up. Go over your books weekly to make sure everything is ship-shape.
4. Keep records of business expenses.
For anything you think you’ll be claiming, maintain detailed records; save time by scanning and digitizing receipts. You can also simplify expense tracking by always using a business credit card for business purchases.
5. Keep a close eye on accounts receivable.
When customers don’t pay on time, your business’s cash flow can dry up fast. Pay attention to when your receivables are due and contact late-paying customers right away to nudge them along. Even if a customer is having financial problems, you may be able to set up a payment plan to get at least some of what you’re owed.