The lack of proper bookkeeping system often results in facing a plethora of business-related problems such as improper tax filings and poor cash flow. If you are a small business owner, these problems can put your company at serious risk. For every business to thrive, good bookkeeping habits are essential. Here are 5 good habits that can protect your business and keep you in the right direction.
1. Choose the right software
When it comes to getting the software for your business, you should not skimp on the program or system you use. If you have a good system, your business will not only reduce manual tasks, but also get more tasks done. While you may be confused with all the options available to you, it is important to consider the software that meets your needs. There are programs loaded with features, but this does not mean you can use all of the features. It is also worth considering programs that are user-friendly.
2. Keep expense receipts
How will you know the amount of money you are spending on your business if you do not keep expense receipts? You may think it is just meager amount, but when the time comes that you need to pay your bills, you will realise that you do not have enough cash flow. You will to check your receipts and monthly statements so you will know how much you are actually spending. Receipts are essential as there are not backup statements.
3. Get help to prepare tax returns
Every business owner knows it is difficult to prepare tax returns as deductions need to be accurate. You need to be well-trained to ensure your bookkeeping process is correct and will not trigger ATO audit.
4. Avoid going “hands-off”
Although you may leave most of your bookkeeping task to a professional, it does not mean you should go entire hands-off. You will need to review reports so you will know what is going on with your business. You will also have to ask the right questions to your bookkeeper. You must also understand basic accounting and bookkeeping so you will have an idea about accounts receivable, trend in expenses and more.
5. Track receivables
Chasing clients can be a tedious task because you need to make sure that all of them have paid their invoices. You will also have to track the logs of your invoices and make sure you have updated the status of each. Tracking your receivables using some bookkeeping solutions will help you find out which invoices are late and unpaid.