Start the New Year Right: Bookkeeping Tips for Entrepreneurs
Ugghhh! Bookkeeping. It is often one of the most neglected elements of business for entrepreneurs. It isn’t sexy. It isn’t fun. Calculating income and outgo. Projecting quarterly taxes estimates. Reporting. Entrepreneurs want to be out there doing. Fixing. Selling.
Don’t neglect your books this year. Start the year off right and adopt these simple tips and you will thank us December next year.
Separate Business and Personal Accounts
The very first step you should take as a business owner–even if you are a small business, sole-proprietor–is to separate your business and personal accounts. When a client pays you, it can be tempting to just dump that money into your personal account. Especially if it is all coming and going “out of the same pot.” Don’t give in to this temptation. Also avoid the temptation to pay personal expenses from business accounts. It is fine to disburse funds to your personal account or to pay yourself a salary from your business accounts, but keep it separate. No vacations on the corporate credit cards–no matter how good the rewards are! Set up a separate account for your business and deposit all income into (and pay all business expenses from) that account.
Pay Yourself First
Your personal stability is as important as your business’s stability. Make it a habit to save a certain percentage of whatever you earn.
Keep On Top of It All
So you hate bookkeeping. That is fine. If you don’t need the services of a full accounting firm, it is okay. Find a good bookkeeper. Many will moonlight for a couple hundred dollars a month. This can be a cost-effective way to keep things all in order. Make sure you are on top of quarterly tax estimates. Track and record your expenses. And invest in bookkeeping software. You will thank us (and so will your bookkeeper!). Finally, know what’s going on in your business from week to week and month to month. You don’t have to do your books to know your books.
Document Your Processes
In a startup business, things are changing rapidly. Sometimes on a daily basis. As you develop processes–no matter how immature they are–document your processes. As the processes mature and change, update your process manual. This is not only common sense, but it will save you a world of headaches should you ever have to face an emergency or unexpected absence from your business.
Be sure to follow these simple guidelines in 2017 and you will be well on your way to keeping your business on sure footing, financially.