Bookkeeping is an essential function in business, whether you’re preparing financial statements on your own for tax season, or a budding business owner looking to get a head start on your operations. The goal of bookkeeping is to keep track of your financial records and transactions, which you need to maintain a financially sound process.
Entrepreneurs are required to store accurate data in ledgers, journals, financial statements, income tax records, and more. Those who choose to crunch the numbers on their own, however, must adopt good bookkeeping habits to stay on top of their finances.
Such habits will reduce risks and keep your business running as smoothly as possible. Here are the bookkeeping habits that can help your business flourish:
1. Establish a Bookkeeping Schedule
If you’re planning on dealing with your company’s finances yourself, set aside some time in your schedule for bookkeeping. You can do it monthly or weekly, it’s up to you to decide. Adopting this habit will help you stay on track of your receipts and transactions before they pile up, which will reduce the risk of inaccurate data recording. This will also help you stay up to date on the financial status of your business and enable you to make informed financial decisions.
2. Separate Business and Personal Accounts
This is an obvious tip; however, many entrepreneurs still do business transactions using their personal accounts. This can be messy and lead to confusion when left unchecked, so the best thing to do is to make a clear distinction between your social security number and sole proprietorship. This will reduce the risk of convoluting your operation’s revenue, expenses, and performance.
3. Utilise the Right Accounting Software
No business should go without accounting software, as it reduces the chances of human errors in your financial records. After all, the heart of your business depends on a reliable bookkeeping system, which is what accounting software aims to give you. It will help you streamline the bookkeeping process with optimal results in a fast, efficient, and effective manner. This includes recording, managing, tracking, and assessing your sole proprietorship’s expenses down to the last penny.
4. Keep All Receipts, Invoices, and Track Your Receivables
Keeping receipts and invoices is a given when it comes to bookkeeping, though tracking cash expenses may be harder to have on record. In cases like these, it’s a good idea to keep a notepad on hand to write down these expenses, enabling you to have a full overview of your cash flow.
If you’re looking for an ecommerce accountant in Australia, get in touch with us today for a free consultation!