There’s a rush of panic that comes with every approaching tax deadline when a business falls behind on bookkeeping, as every business owner who has ever been in this position knows. Yet, staying on top of your tax obligations isn’t the only reason to keep up with your bookkeeping. Staying up to date is essential for ongoing evaluations of the financial health of your business. You need to know how you’re doing with cash flow, whether certain account balances are past due, and how your expenses are looking lately. Use these tips to stay on top of your small business bookkeeping tasks.
5 Ways to Avoid Getting Behind on Bookkeeping
Understand the potential consequences of falling behind on bookkeeping.
You already know that it’s not ideal to fall behind on your bookkeeping tasks, but do you know exactly why? Understanding the potential consequences can serve as an effective motivator to stay on top of these tasks. Many things can happen if your bookkeeping isn’t up to snuff, but here are a few of the more common problems:
- Cash flow crunch – Unless you can track your cash flow accurately, you won’t know exactly how much money your business is making. This prevents you from making smart business decisions.
- IRS problems – The IRS frowns upon sloppy bookkeeping, to say the least. If you aren’t in full compliance, you could lose an IRS audit.
- Out-of-control expenses – If you aren’t tracking your expenses, how can you determine if they are less than your sales?
- Invoicing errors – Poor bookkeeping habits can sometimes lead to invoicing errors, which means your clients might be billed the wrong amount.
These are just a few common problems that can happen when small business owners fall behind on their bookkeeping tasks.
Ditch spreadsheets and transition to specialized accounting software like QuickBooks®.
If you’re like many small business owners, you’re currently using spreadsheets to keep track of your sales, expenses, and other figures. Spreadsheets may be useful for hobby businesses, but if you’re going to get serious about growing your company and staying on top of your bookkeeping, you’ll need better software. QuickBooks® is one of the most commonly recommended programs for a variety of reasons, including the following:
- Unlike Excel spreadsheets, QuickBooks® was designed specifically to track and manage the financial health of companies.
- QuickBooks® is scalable and customizable.
- You can use QuickBooks® to easily send invoices and track sales, payments, and expenses.
- You can generate reports in order to spot trends, which can inform strategic business decisions.
- QuickBooks® significantly reduces the potential for costly errors.
Above all, small business owners generally prefer QuickBooks® because it makes small business bookkeeping easier and less time-consuming. You’ll be able to automate many tasks, which substantially reduces the time it takes to handle bookkeeping matters. In other words, you’ll be far less likely to fall behind on your bookkeeping.
Invest in QuickBooks® training to improve efficiency with accounting and bookkeeping tasks.
Although QuickBooks® can definitely help ensure that you’ll never fall behind on your small business bookkeeping again, there can be a bit of a learning curve. It’s best to work with a Certified QuickBooks® ProAdvisor, who can help you set up QuickBooks® and customize it to your business. You’ll also learn how to automate certain tasks and use all of the features to your advantage.
Connect your bank accounts so transactions are automatically updated as they occur.
If you haven’t yet done so, you should set up business bank accounts, including a checking account, savings account, and business credit card. Keep your business finances strictly separate from your personal finances. Once you’ve established separate accounts for your company, you can connect your business bank accounts directly to your QuickBooks® software.
The reason why you’ll want to connect your accounts is so QuickBooks® can automatically record all of your business-related transactions. It will import your expense records and sales. It will even automatically categorize your transactions. For example, if you own a carpentry business, QuickBooks® can categorize expenses for tools and materials separately. (However, you’ll need to review the categorization to ensure it’s done correctly.)
Set aside time to digitize your receipts each week.
Some small business owners like to set aside some time once per month to digitize their receipts. However, if you’ve already had problems with falling behind on small business bookkeeping tasks, it might be better to do this once per week or even at the end of each day.
Use a receipt scanner to digitize all of your paper receipts. You can upload your digital receipts into QuickBooks®. The software will match each receipt to the record of the corresponding transaction. All you’ll need to do is approve the match. Alternatively, if the receipt lacks a corresponding digital transaction, QuickBooks® will create one for you. Digitizing your receipts is an easy way to stay on top of IRS requirements without having to resort to the messy shoebox method.
Don’t wait until you start to fall behind on your small business bookkeeping tasks to enlist professional assistance.
If you’re finding it difficult to keep up with all the demands on your time, it’s time to enlist the help of an accounting professional to ensure your books stay up-to-date and accurate
At Accounting Meister, we have more than 20 years of experience providing outsourced accounting and bookkeeping assistance to start-ups and small businesses. With QuickBooks® ProAdvisor Certification, we’ve also conducted more than 3,400 hours of independent QuickBooks® training and tutoring to help SMB owners stay on top of their daily transactions. Contact us to request a free, no-obligation, 15-minute consultation.
Need Help to Get Caught Up With Bookkeeping Tasks?
Accounting Meister can help you get caught up if you’ve already fallen behind on bookkeeping tasks. Contact us to learn more about our Catch-Up Bookkeeping services.