Falling behind on bookkeeping can happen to any business owner. Between juggling operations, managing staff, and serving customers, financial record-keeping can sometimes take a back seat. However, catching up on your bookkeeping is crucial for maintaining the financial health of your business, legal compliance, and tax preparation. If you find yourself lagging in this area, don't worry! Here’s a step-by-step guide to get you back on track.
Every story you have to tell about your business shows up in your financials. Keeping accurate financial records can help you make better financial decisions and ensure that your business is healthy. Here is a list of 9 financial metrics that you should track and review on a monthly basis.
You have landed a new contract and your client has agreed to pay you $5000 per month to create and run ads for him on social media. Only $2000 of the $5000 is your management/consulting fee for the work that you will do and the other $3000 per month is for ad spend with Facebook, Google Adwords or some other platform. With the technology available these days it is likely that the funds have been directly deposited into your bank account. So, how are you going to keep track of the actual revenue you have earned for your services separate from the money that has been provided for ad spend?
Congratulations! You've decided to take on the task of bookkeeping for your business. Don't be afraid. Bookkeeping doesn't have to be complicated. If you have a great system in place when you get started, things will be a lot easier.
A big topic being discussed nowadays is outsourcing those things that are not your specialty. Outsourcing is a great way for you to spend more time do things that only you should be doing in your business and letting others do the rest. Although this is a great strategy, not everyone will be at a point where they want to or are ready to outsource their bookkeeping. However, if you are going to do your own bookkeeping it is important that you do it right.
A group of small business owners were asked, "When it comes to the bookkeeping process in your business, what's the single biggest challenge you're facing right now?" The number one response was time. The amount of time it takes to reconcile everything and the lack of time to spend reconciling everything. By developing automated bookkeeping workflow processes, you can save both time and money.
One of the biggest time drainers for us busy entrepreneurs is manual and duplicate data entry. Aren't you glad that Xero has developed a platform that helps us save time and money by allowing other software programs to communicate and share information with it? We have found that business owners spend a lot of time entering client information into multiple systems, keeping up with outstanding balances, and organizing and storing documents.
As an accountant I've worked with several accounting programs. I have to say that Xero has me sold. It is easy to learn and accessible from almost anywhere. You can collaborate with advisors to provide real time financial reports whenever you need them. The low cost monthly subscription fee makes it affordable for small business owners and independent contractors.
