5 commonly overlooked bookkeeping tactics
Whether you’re new to business, new to bookkeeping, or just want a refresher in strategic accounting, there’s a lot to be said for exploring the bookkeeping tactics most likely to enhance your company’s performance.
Successful accounting strategies include any practice that allows your business to:
save time or money,
complete bookkeeping tasks more efficiently,
mitigate the stress associated with tax remittances, returns, and audits
plan for your financial future
But the best – and sometimes the most overlooked - bookkeeping tactics are the ones that lend themselves to accomplishing all of these goals.
Fundamental Bookkeeping Strategies
While some bookkeeping strategies may seem obvious, they’re important none-the-less because they lay the groundwork for more streamlined accounting. Remember, your success in business will only ever be as solid as the financial foundation supporting it. And when practiced together, this triad of time-saving tactics forms the basis of an efficient bookkeeping system.
Delegate or Outsource Your Bookkeeping
One of the cardinal rules for entrepreneurs is delegate, delegate, delegate! In fact, contrary to popular opinion, the most successful business owners don’t do everything themselves – especially when it involves an area as complex as accounting.
Taking advantage of professional bookkeeping services is not only the best way to keep your financial records in order, it can boost your company’s profits by:
ensuring you utilize every available credit, deduction, and cost-cutting measure to minimize the taxes you pay, and
allowing you to transform your financial reports into business strategies designed to maximize revenue
Upgrade to Online Accounting
Manual bookkeeping systems are not only cumbersome and time-consuming, they lead to more clerical errors than software or cloud-based solutions. And the marvel of online technology makes it possible for your business to accomplish everything from syncing bank accounts with bookkeeping records, to generating customer invoices “on-the-go” from a mobile app.
Other benefits of accounting software include:
the ability to generate period-end financial statements with just a few keystrokes,
access to payroll modules that feature up-to-date employee deduction and remittance data, and
convenient storage and retrieval of vital support documents in the event that your business is audited
Regularly Record and File Transactions
Investing the few minutes it takes to document income and expense-related activities as they happen will save much time and many headaches down the road. Get into the habit of generating, recording, and filing expense receipts, client invoices, and payments on a daily basis. Not only will you be less likely to lose important documents and miss entering transactions, it will make the process of filing complete and accurate tax returns much easier.
Basic accounting strategies help set the stage for a profitable entrepreneurial journey. But sometimes it’s the road less travelled that leads to even greater success. Consider these 5 commonly overlooked bookkeeping tactics for enhancing your long-term business strategy.
1. Take an Active Interest in Your Accounts
The more you know about what’s going on with your business, the more likely it is to thrive. Rather than putting your accounting on auto-pilot - and letting someone else steer crucial cost and income decisions - make an effort to understand your company at the financial level by:
learning the basics of bookkeeping,
spending a few minutes reviewing your company’s transactions each day, and
sitting down with your accounting professional as often as necessary to keep a finger on the pulse of your operations
2. Adopt a Consistent Approach
Planning for success starts with planning your accounts, and that includes taking a consistent approach to categorizing your income and expenses. Not only will labelling these transactions in a uniform manner speed up your bookkeeping process, it will vastly improve the accuracy – and ultimately the usefulness - of your company’s financial statements.
3. Stay on Point
Maintaining control over your cash and accounts is more important than many entrepreneurs realize. One worthwhile - and often underutilized - method for staying on point with your finances is to take advantage of automatic email alerts for utility and credit card bills. Additionally, setting up automatic payments for any recurring charges will save time and help you avoid potential late payment fees.
4. Fine-Tune Your Marketing
To wring maximum value from a marketing budget, you need to understand where your investment is earning the highest returns. Consider separating your advertising expenses by marketing channel so you can compare amounts spent on print, email, customer events, social media and other digital platforms, with the results that they generate.
5. Plan for the Future
Don’t let yourself become so bogged down by today’s business concerns that you forget to plot a path to the future. Even if a cash accounting system meets your needs at the moment, for example, you should recognize that most large, well-established companies (read: those you’re most likely to merge with or sell to) use an accrual accounting method instead.
This article is intended to be a guide only. None of the comments contained in the article are intended to be advice, whether legal, financial or professional. You should not act solely on the basis of the information contained in this article because many aspects of the material have been generalised and the tax laws apply differently to different people in different circumstances. Further, as tax and related laws change frequently, there may have been changes to the law since this article was published. Specific advice should always be obtained from a tax professional.