Bookkeeping is a necessary part of owning and operating your business. Instead of dreading this vital function, I encourage you to take a fresh look at how you can simplify your bookkeeping process, then utilize your up-to-date financial information to make better decisions for growing your business.
Start with the best accounting software
Selecting the best accounting software depends on what you sell, how you run your business and who will need access to your bookkeeping on a consistent basis.
The two biggest solutions I recommend and train on are QuickBooks (either online or desktop) and Xero.
Both are powerful in providing day-to-day functionality for operating your business, integrating with other software solutions and getting reports that will help you run your business.
No matter which software you choose, you still need to enter transactions related to your business in a timely manner.
Enter transactions as they happen
One of the keys to not falling behind on your bookkeeping is to enter transactions as they occur. Don't let them pile up in stacks of paper on your desk or as unorganized emails in your inbox.
You may think you don't have time to do bookkeeping functions on a daily basis, but the reality is it will take less time to handle transactions once (and file the supporting documents) rather than shuffle the receipts or papers around and handling them again later.
The key is to create a routine for logging into your accounting software frequently, and handling each piece of paper in systematized way . I always tell business owners that they should be in their accounting software as often as they make or spend money.
For example, when you purchase something, put the paper copy in a To Be Scanned folder or tray, then at the end of each day have someone enter the transaction into your accounting software. Attach an electronic copy to the transaction or file in your electronic filing system by year. For emailed receipts, make it a point to clear your inbox by the end of each day.
By the way, it's usually not a matter of time, but a lack of desire to handle anything related to bookkeeping that causes us to procrastinate. I challenge you to change your thinking about bookkeeping. Get into the habit of looking at your financial reports often.
Learn to understand your financials
If you've never looked at your financial statements - start now. Start with only two numbers - your gross revenues, and your net income.
Run a Profit & Loss Statement (also called an Income Statement) for your company for one day (how about yesterday).
Look at your Total Income. Compare that to your daily sales goal (yes, you should have one).
If your daily sales goal is $1000, and you start looking at your sales daily, you will get excited on those days that go over $1000, and you will want to get more sales on those days that fall below. Seeing your daily revenue can motivate you to make a last minute sales call, send a regular client an email, or post something on social media.
The second number, your net income (or bottom line), tells you if you're making money after all the costs and operating expenses have been paid. You won't know if you are profitable without having your books up to date. Look at the net income on a monthly basis. If it's positive, you are making money, if it's negative, you are losing money and need to take action.
Your business numbers should excite and motivate you!
Use bank feeds in your accounting system
Most top accounting software integrates directly with your bank account so that transactions flow into your accounting software automatically.
Bank feeds can insure you are recording all transactions, they should not be used as a replacement however for entering the transactions as they occur.
The reason is that there will be a delay between the day you incurred the expense or made a deposit and the day it arrives in your bank feed. Also, many of the bank feeds lack the detail needed to accurately select a vendor or account. Not all bank feeds are created equal and work perfectly.
While not a replacement for entering all transactions, they can be extremely time saving for recurring transactions and are also used to catch data entry errors and make sure all transactions are accounted for.
Make sure to learn about your accounting software bank feeds and how to set up banking rules to save time and data entry.
Use software integrations to automate processes
There are thousands of software solutions that can help streamline your workflow and automate routine tasks. Selecting the right one depends on your need. Here are some of the most common solutions and the benefits of using them.
Automated fetching of Bank Statements and Bills AND online filing system - one of the biggest time saving solutions for small business owners is Hubdoc. You enter login credentials once (256-bit encryption of course), and Hubdoc automatically downloads statements (think bank, PayPal, credit cards, Comcast, Centurylink, etc.) and bills when they are available automatically after that. You can also push bills and receipts into Xero or QBO. It evens files them for you!
Time tracking by project, customer or employee is easy with T-Sheets. The easy to use mobile application, exceptional customer service, and integration with accounting software makes them one of the top time tracking solutions.
Business plan, budgeting, forecasting, cash flow management, bench marking - LivePlan has it all for those of you that are just starting out or want greater insights into your future financials. LivePlan gives meaning to your QuickBooks or Xero accounting software.
Increase sales by marketing to your existing customer with Constant Contact. It's much cheaper to sell to your current customers, than to get new customers. Integrating your client list from QBO or Xero into Constant Contact allows you to upsell easily.
Need to share QuickBooks desktop company file with an accountant or bookkeeper? You definitely need Qbox for file sharing documents AND your QuickBooks file. Eliminate the need for your bookkeeper to travel to your office, or having to send a copy of your QB file to your accountant. Qbox safely locks out one user, while the other user is working.
Invest time to implement any or all of these processes, and change the way you think about numbers. Your bookkeeping will turn from dreadful to desirable.