Make better bookkeeping the number one resolution for your business in 2016
Emily Coltman, chief accountant atfreeAgent which provides a cloud accounting software for freelancers, contractors and micro-businesses gives her top tips for improving your bookkeeping and providingyour business a boost in 2016.
The New Year is almost here, which means it’s the time when many small business owners start thinking about making resolutions to help them strengthen their business for the year ahead.
One of the most beneficial changes to consider making is improving your small business bookkeeping, to give you greater clarity about your finances. And the good news is that, rather than being a huge, daunting prospect, the process of keeping better books can actually be easy and manageable.
Pick a regular time each week for bookkeeping
One of the biggest problems that small business owners have when it comes to bookkeeping is that they don’t do it regularly enough. They leave their books alone for months on end and then are faced with the monumental task of organising huge amounts of data before they can find any useful information about how their business is performing.
don’t do this. Dedicate a regular amount of for example, an hour a week to concentrate on your books and complete your admin. Remember to also try and use the same block of time (whenever possible) for your bookkeeping each week, so it becomes an important, established habit for your working life rather than an unwelcome hindrance.
Make a checklist of important tasks to complete each week
Now that you’ve ring-fenced a regular slot of time for bookkeeping, what should you do with it? The best strategy is to draw up a list of all the important tasks that you usually do when managing your finances and then create a routine based around these.
This would usually include:
Send invoices for any work you’ve just completed and chase up any outstanding payments from your clients. This is vital for keeping your cash flow healthy and teaching your customers to pay promptly.
(2) Reconciling bank transactions
it’s important to regularly explain and reconcile data from your bank in your accounts, otherwise struggle when you finally see your accountant and have to try and remember what each transaction was for when they review your accounts.
Some online accounting systems enable you to import bank data directly into your accounts, so if you’re using one of these, use some of your hour to log in and explain all of your latest transactions. It could save you a lot of time in the long run, as you don’t have to key in all of your transactions manually.
(3) Managing your bills
Stay on top of your cash flow by setting time aside to go into your online banking site and pay any bills that are due to be paid.
(4) Check your project profitability
Tie costs back to any projects that you’re running to make sure that you have a true view of how much profit you’re making on each project. Once you have the full picture, you can make even smarter decisions about where to spend your time and decide whether you need to revisit your pricing if you arent making enough profit.
(5) Check how much tax you owe
Keep an up-to-date total of how much tax you currently owe, and make sure that you can see this information at a glance. If it helps, you could also set up a separate bank account just for your tax and keep this updated every time you do your bookkeeping too.
don’t forget the small stuff
don’t feel you have to always wait until it’s bookkeeping time? in order to do your financial tasks. Your hour a week should be for high-level admin, but there are plenty of smaller things to do in the meantime for example:
Emily Coltman is chief accountant to FreeAgent, provider of cloud accounting software for freelancers, micro businesses and accountants. She is passionate about helping the owners of small and growing businesses to escape their ?fear of the numbers? and she translates small business finance and tax into practical common sense speak.
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