The new year provides the opportunity to take a step back, reset, and commit to improving. For small business owners, nothing is more important than your finances, and they should therefore be at the top of your resolution list for 2022.
As we grow closer to ringing in another new year, now is the perfect time to get your books in order. Here are 10 small business bookkeeping tips to make a part of your normal routine to help your business succeed in 2022 and beyond.
10 Small Business Bookkeeping Tips for the New Year
- Detailed vs. Broad account systems. When setting up your bookkeeping, you can choose to be detailed with your account system or keep things at a higher level. Keeping things detailed (don’t overdo it) with roll up accounts will provide you with the best, most accurate information about your business.
- Create a simple yet functional chart of accounts. Setup accounts that you NEED and nothing more. Don’t over categorize or make your bookkeeping tasks more cumbersome than they need to be.
- Review financial statements regularly. There are three financial statements for every business: income, balance sheet, and cash flow. These give you a summary of all business activity, which you can use to make more informed business decisions.
- Review your financial performance at least once a month. This will allow you to identify potential problems, know what’s working well, and gather the insights needed to help take your business to the next level!
- Block time to manage your books. Scheduling time in your calendar each week to help avoid receipts and invoices piling up. Stick to the time you’ve set aside, and always put your finances first.
- Ensure you understand your seasonal cash flow. This will help you forecast for it and ensure your business has the resources needed to balance survival during the slow seasons thanks to success during the busy ones.
- Review your accounts receivable on a regular basis. Actively working on collecting payments helps protect your business from unnecessary losses.
- Avoid paying bills too early. Delaying until due keeps cash in your bank which provides security – and interest earnings in some cases.
- Don’t mix personal and business accounts. Comingling personal and business funds can lead to an accounting nightmare, particularly during tax season. It can also break some legal protections that protects your personal assets in the event of a lawsuit. Key takeaway: DO NOT MIX!
- Always be on the lookout for opportunities to improve. Whether you manage your books in house or hire out your bookkeeping, always look to improve. Challenge yourself or press your vendor to get the best, most detailed information possible.
Follow these small business bookkeeping tips during the new year to help you be successful in your finances, and in turn, successful in your business.
Get Your Finances Ready for the New Year
Ready to get outsource your financial management and get expert help? Tentho offers bookkeeping, accounting, and CFO advisory services built for small and medium-sized businesses. Click below to book a free consultation and discover how we can help you prepare for the future!