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Bookkeeping Basics for Your Small Business

Small business bookkeeping is just as critical as bookkeeping for larger companies. Maintaining your books is a key part of understanding your business and its profitability. By keeping your books up to date, you can make sure your business is actually producing a profit, see which aspects of your business are most profitable, and make sure your business is meeting its objectives. Set yourself up for success today with these bookkeeping basics for your small business.

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The Importance of Small Business Bookkeeping

Nothing could be more important than making sure you have the finances to support your small business. Proper bookkeeping provides you with unparalleled insight into your business’ cash flow. When you understand how much money is flowing into and out of your business, as well as where that money is coming from and where it is going, you can determine the short-term viability of your company. With up-to-date balance sheets, current operating results, and more, you can ensure you’re not spending more than you’re making, so you’re able to run your daily operations and pay the bills. Similarly, you can track your income over the long term to assess your company’s growth and prepare to meet your federal tax obligations each year. By keeping your books current, you can better prepare to meet with your tax accountant and save time and money in the process.

Small Business Bookkeeping Basics, Tips, and Tricks

Maintaining the bookkeeping for your business can be tedious and confusing. On the other hand, failing to make sure that the financials of your business are recorded correctly can quickly become a nightmare. Use these small business bookkeeping basics, tips, and tricks to ensure that your records stay current and your business stays out of trouble.

Plan for Major Expenses

For smaller businesses, it can be difficult to pay for major expenses. Whenever possible, try to plan for these expenses by waiting until you have the budget to cover them and staggering larger expenses over time. It is much easier to plan for these expenses if your books are up to date. Here are a few examples of expenses to plan for in advance:

  • Large repairs and maintenance

  • New equipment and supplies

  • Inventory

  • New hires

Take Care of Tax Obligations

Each year, businesses need to set aside money for taxes, and each year, many small businesses struggle to find the money. When you know what’s happening with your finances on a regular basis, you can better prepare for tax season. Before you increase your spending in any other area, set aside some of your funds each month so you’ll have enough money to pay your tax bill when it comes.

Avoid Using Cash

One of the biggest bookkeeping basics for any business is to avoid paying in cash for business expenses whenever possible. Cash is more difficult to track and can make it harder to keep up with your books. Instead, pay with a business credit or debit card. This way, you can quickly see where your money is being spent and record your expenses in a timely manner.

Outsource Your Small Business Bookkeeping Today

It’s not surprising that 68% of business owners surveyed indicate that outsourced bookkeeping makes their accounting simpler and more effective. One of the biggest values of outsourced bookkeeping is it gives you much more time to focus on your business. With our professional small business bookkeeping services, your books will be consistently updated and formatted so they’re easy to evaluate.

Tower Books provides cloud-based bookkeeping services to reconcile and maintain your books, categorize your transactions, and prepare monthly financial statements for your business. We can also handle bill paying, invoicing, and filing timely sales tax returns, as well as coordinate payroll, set up and manage employee benefit plans, provide custom reports to investors and outside partners, and more. Imagine taking all those tasks off your plate! Learn more about how our personal approach and bookkeeping services can help your small business today. Contact us online or call (757) 512-8742 for more information.