In part 1 of these series, we mentioned some simple things you can do to help manage your money and make bookkeeping simpler. Some of these included handling paper once, and reporting monthly profit and loss. Here, in part 2, we will continue with some more tips that will help you get bookkeeping right the first time.
Bookkeeping, simply by definition, is the recording of a company’s financial transactions. This includes sales, purchases, income, and payments.
5) Manage small ticket expenses using cards.
Using credit cards for all your small and major expenses makes the bookkeeping work easier for you. Credit card companies produce itemized statements that list the stores where purchases were made, the date of the transaction, and the total amount spent. It also shows you what your total balance is, and if you check your statements online, you can also track how much you have spent in what time frame so as to avoid overspending.
In addition you can also track expenses by having separate credit and bank cards for business use and personal use. By only making business expenses on company credit cards, it’s easier to track and is less of a headache for professional bookkeepers and yourself too. For any personal expenses, use a personal card.
6) Manage large ticket expenses by saying ‘No’.
Delay purchases of computer equipment, and prefer leasing over purchase. Although computer equipment appears as an asset on the balance sheet, in some ways they turn out to be liabilities. They need to be fixed when they break down, carted when you move office, and thrown out when they become obsolete.
If you have a service-based business, you want to build cash at the bank, and reinvesting in these cash reserves will allow you to buy human resource and ideas, or return money to investors. Skip the expensive gadgets and furniture. Only buy what is necessary.
7) Time wasters disguised as freebies.
Are you getting offers or thinking of getting things done for “free” from friends and family? Think twice. When getting work done for free from relatives, you tend to compromise on quality, and, of course, time as well. They may extend the length of time it may take to complete a project because they don’t have time to dedicate to what’s important to you. Also, you risk the chance of having to do things twice, which you may not always have time or patience to do. If you do however, choose to take help from relatives, set a quality threshold that needs to be achieved and be prepared to pay a small sum to ensure that your expectation of quality is being met.
When you are starting out and learning, pay more money for services and be glad for the time it will save you later.
8) Time to outsource bookkeeping
If you find you are spending a large amount of time on monthly accounts, warning lights should go off. Some signs to look out for is hiring more staff, exceeding $20 000 in monthly turnover or large increases in sales and customers, or even fines from the Government for late submissions. When these things become difficult to manage, it is time to outsource your bookkeeping to an accounting firm, and help you get things done right the first time.