Every business’ bookkeeping practices are going to be slightly different depending on your industry. If you’re in retail sales, you’ll need to keep different records and have different systems than if you’re like me and provide a service to clients that you invoice and bill for.
Regardless of what kind of business you have, there are a few general rules you should keep in mind when it comes to your books. Otherwise, things can get out of hand really quickly. Here are some bookkeeping basics to get you started.
Get Yourself Bookkeeping Software
First thing’s first, get yourself some bookkeeping or accounting software. It’s not terribly expensive, but it will save you a whole ton of time in the long run! There are different programs for different industries, and a few that are more generic. So make sure you get the right system for you.
As a freelance writer and marketing consultant, I use a software called Bonsai. It’s built specifically with freelancers in mind, so if you are running a retail or other kind of business, it’s probably not the one for you. Other commonly used software includes programs such as Quickbooks, Freshbooks, and Simple Accounting.
Whatever you use, make sure it functions how you need it to function. Test a few out. Most software systems allow you to try it out for a limited time at no cost, so pick a few of the ones you think you might work for you and take them out for a test spin.
Keep Record of Everything
And I mean everything. When it comes to tax time, you’re going to need a record of everything. That means save your invoices, receipts, and all other financial records. Store them somewhere safe, and definitely keep a backup.
I am pretty particular about tracking my finances. Because I do freelance work, I invoice for one month and get paid sometime during the next (or the next!). Because of this, I like to keep tabs on the income I’ve actually made in a week (even if I don’t receive payment for 6 to 8 weeks). In this case, I keep a running tab in Airtable.
While we’re on the topic of keeping track, definitely make sure you also keep your receipts! I admit to being terrible for this, so I’ve taken to capturing a photo and storing it in an Airtable spreadsheet to make sure I have it in case I happen to need it. However you store them, you’ll need them come tax season and you’ll be frustrated if you don’t have them.
Make Sure to Review Your Books Weekly
As a budding entrepreneur, I know you’re incredibly busy. Probably too busy to take a peek through your books weekly. But you need to carve the time out. If something is incorrectly documented or missing, your chances of catching it are much better if the transaction is fresh in your mind and you are regularly reviewing your books. Ten minutes can save you a hell of a headache later.
Work to Continually Improve
Bookkeeping can be a challenge to master at first, but once you get the hang of it you’re golden. That said, I’m always looking for ways to make my books more efficient, accurate and easier for me to do (and occasionally understand).
If you’re new to business and weren’t an accountant or a bookkeeper in another life, mastering this skill will be the first real step to becoming the entrepreneur you dream of.
Do you have great bookkeeping tips? Share them below!
Looking for more information on business?
- 5 Productivity Tricks for Entrepreneurs
- 4 Alternatives for Small Business Funding
- Hire an Accountant as Soon as Possible
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