How to simplify small business finances with these 8 bookkeeping tips

It’s not uncommon for small business bookkeeping to not be your favourite activity. It’s always fun to look at your profits, but what about going over your ledgers and calculators? Maybe not as much as you’d think.

If you’d like to simplify (and speed up) the bookkeeping process, here are a few tips.

Assist yourself with bookkeeping on a regular basis.

The easiest way to do your own bookkeeping is in manageable chunks. Don’t try to do it all at once. The last-minute, panic-fueled bookkeeping cram session right before tax time may be entertaining, but you can do yourself a favour by completing routine bookkeeping tasks every week.

As a starting point, learn the fundamentals of bookkeeping. Bookkeeping basics for small business owners are explained in our how-to guide. Then, set aside an hour each week for bookkeeping on your calendar. A checklist of routine tasks can be completed during that hour.

Examples of these tasks include the following:

• Pay attention to invoices and keep track of payments

• Verify expenses and invoices, and pay them off.

• Check the balance of your business’s account.

• Recognize and classify your expenses and incoming payments

• Receipts and documents should be recorded and stored.

• Compile and review your financial reports.

When you’ve completed your checklist, your records should be current. All you need to do is a little bit of work each week to keep your books clean throughout the year. When it’s part of your small business bookkeeping routine, it doesn’t feel like work.

Personal and business finances should be kept separate.

Separate your financial affairs. The result of combining your business income with your personal accounts is a financial mess. Separate bank accounts for personal and business expenses will save you time and energy by eliminating confusion.

You can open a business bank account even if you’ve never done so before. If you already work with a bank, it doesn’t hurt to look at other options. Even though your priorities may be different, you should still consider opening a bank account with no minimal fees.

Create a new account quickly and easily after selecting a bank. Set up a debit card through your business bank account for online payments and purchases. There is a major benefit to having all of your business transactions reflected in the same account, which simplifies the reconciliation process.

Of course, separating your accounts does not mean that your business does not pay you. You can withdraw a regular salary from your business or, if you’re a sole proprietor, you can pay yourself using the draw method. These withdrawals, which are also known as owner’s draws, are easy to track and document in your bookkeeping system. In your business account statements, you should record any payments you make to yourself, whether it’s a draw or a salary.

Bookkeeping is as simple as linking your business bank account to your accounting software once you’ve separated your accounts. Your weekly bookkeeping session should be a breeze when you check your single account and categorise purchases and record payments. A little bit of parsing and cleaning up is all that’s needed.

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