When it comes to managing the books for your small business, timeliness and accuracy are key. One of the best things you can do is to come up with a schedule to help you stay on track with the accounting tasks that need to be completed in order to keep your business up and running.
Not sure where to start? Here are seven regular accounting tasks you can do as a small business owner:
Be sure to record all incoming and outgoing transactions under the proper account. When possible, try to move away from manually recording this information. Instead, use tools such as Microsoft Excel or accounting software like QuickBooks. These programs allow you to automatically update transactions in the system, helping you to increase your efficiency.
We recommend keeping copies of all receipts. However, it’s equally important to ensure that your receipts are organized and easily accessible. Why? Receipts help you to find mistakes or gaps in your financial records.
If you are not keeping your receipts safe and organized for the business or worse, if you typically lose them or mix them in with your personal receipts, then you will have a very tough time finding and correcting mistakes.
The good news is that you can digitally store your receipts in order to gain better control over your business finances. Many accounting software platforms such as QuickBooks allow you to upload scanned copies of your receipts so that you can get rid of physical paper altogether.
Tip: Consider using QuickBooks’ mobile app. This feature makes it easy for users to attach photos of receipts and even has the functionality to “sync PayPal transactions, link business cards with American Express, import sales data from Square and more.”
In addition, bookkeeping companies, like Remote Quality Bookkeeping, have access to more robust and efficient versions of accounting software, compared to the one you or your in-house bookkeeper currently use.
The takeaway here is that you should not wait until tax time to try to get a handle on your receipts and records. Staying on top of your documentation including your receipts will help also you to avoid the potential for an IRS audit.
Review Vendor Invoices
It’s important to keep an up-to-date record of each of your vendors and their related payment details, such as upcoming invoice due dates and payment addresses. One easy tip is to create calendar reminders so that you are never late with a payment. This can save on late fees and extra charges. It may also be beneficial to take advantage of early payment terms – provided that you don’t have any other upcoming obligations in that particular week, such as payroll.
Speaking of payroll, this accounting task is one of the least favorite, but it is certainly one of the most important. There are many steps involved in administering payroll including:
- Computing employee hours, voluntary deductions (e.g. 401Ks), incentive payments, sick leave as well as taxes.
- Processing any payroll changes to employee records for new hires and current employees.
- Printing pay stubs, as well as processing and distributing paychecks or direct deposits to all employees on time.
- Verifying and submitting local, state, and federal payroll taxes.
It is critical to plan these activities carefully so that you are always on time when it comes to payroll.
Send Invoices to Your Clients
When creating your invoice be sure to include payment terms. Net 30 (meaning, your customer has 30 days to remit payment) is one of the most commonly used invoicing payment terms. You can also consider offering discounts to customers who settle their invoices early. For example, 1/10 Net 30 means the customer will receive a 1% discount if the invoice is paid within 10 days.
Tip: QuickBooks allows you to automate your invoicing process and improve efficiency. Remember that the sooner you can invoice your clients, the sooner you can get paid.
Track Your Progress
Comparing your financials is one of the best ways to gauge whether or not your business is making progress. For instance, how did your sales do this week compared to last week and why? How do these numbers compare to the same week last year? This process will help you to identify what worked well and what didn’t – so you can make the necessary adjustments as you plan for the weeks and months ahead
Forecast Your Cash Flow
One of the most important things to track is your cash flow. Knowing the amount of cash on hand at a particular time is crucial. However, timing is also key as it allows your business to plan carefully — especially if you are in a seasonal or cyclical industry.
When making cash flow projections, you can create a spreadsheet showing your current cash position and your expected inflows (cash receipts) and outflows (cash payments) over the coming weeks. Remote Quality Bookkeeping CEO, Mark Kilduff said it best when he noted: “[Cash flow] forecasting is just like the weather. It gives you ample time to plan if a storm is coming or if it’s going to be a beautiful beach week.”
Bonus: Hire an Outsourced Bookkeeping Provider to Help
There’s a lot involved when it comes to managing regular accounting tasks for small business success. All of these functions are essential but they take a significant amount of time away from your core business because they are neither revenue generating nor strategic.
Outsourcing your bookkeeping transfers these tasks to a team of experts, freeing up your time to focus on value-added activities such as building better client relationships, exploring new partnerships and expanding your business.