One way to increase your start-up's cash flow is by reducing the amount you pay out in salaries. Hiring a full-time bookkeeper or accountant may stretch your finances and spell trouble for your business. Thus, it may be a good idea to handle your own bookkeeping and hire a professional once things pick up. With this in mind, here are a few steps you can take to ensure proper bookkeeping, even without professional help.
Invest in Bookkeeping Software
Manual bookkeeping can be time-consuming and costly. It carries the risk of errors, and this can adversely affect your financial analysis. Thus, consider investing in bookkeeping software. There are numerous options and solutions for small businesses. What's more, they are affordable as well. When shopping around for software, look for the following:
- Simple and easy-to-use layout
- Short-term subscriptions as they won't put a strain on your cash flow
- Tax and reporting features
- Reliable security systems
- Scalable software that adapts to your business' growing needs
A good software package can take the stress out of bookkeeping, promote accuracy, and allow accurate reporting.
Set Up Basic Accounts
There are various basic bookkeeping accounts that every small business owner should have. Failure to keep certain records can result in inaccurate reporting, which will adversely affect your business. So for you to have an accurate view of the state of your business, set up the following basic accounts in your software:
- Cash account
- Accounts receivable and payable accounts
- Sales and purchases accounts
- Loans payable
If you have employees, you have to set up a payroll account as well. This will ensure proper tax reporting. Also, if you inject any form of equity into the business, set up an equity account too.
Make Regular Updates
One mistake most small business owners make is to neglect their books. If you go two or three weeks without updating your accounts, you will most likely make errors and mistakes when recording. Thus, update the books regularly to ensure accuracy in bookkeeping. Daily updates are recommended if you have a lot of business daily. However, weekly updates are also great. Just ensure you store all the receipts and invoices to prevent some records from falling through the cracks.
Seek Help Whenever Necessary
Just because you don't want a full-time bookkeeper doesn't mean you should get one. Some aspects of bookkeeping can be too complicated for a non-professional to understand. Instead of tucking such issues away, consider getting help from a part-time bookkeeper or accountant. They can come in once a month to check your books and handle complex tasks. The bookkeeper can also handle incomplete records for accurate financial reporting and analysis.
Proper bookkeeping is essential in promoting business growth and building cash flow. Don't hesitate to seek professional help whenever necessary!