Bookkeeping is a time-consuming skill, and not one you can neglect. In fact, over 40% of small businesses managers and owners say their bookkeeping tasks are often pushed into the background. This is understandable, because small business owners have so much on their plates. From a business perspective, however, you must keep up to date with your bookkeeping tasks, or you risk shortchanging your business, which could mean a business loss. Here are some guidelines for tasks you need to finish by the end of each business week.
Those Annoying Bills
No one likes to pay bills, but as a small business owner, there are many bills that you need to pay in order to continue to do business successfully. In general, most bills fall into these categories:
- Taxes: federal, state, local and payroll taxes are examples of tax bills. As a small business owner, you may want to pay your taxes monthly or quarterly, based on what works best for you.
- Utilities: these are paid monthly, and they include internet, phone, electricity, and water.
- Suppliers and inventory: most of these are upon receipt, net 10 days, or net 30 days.
- Rent or mortgage payment for your business: usually paid monthly
As a small business owner, it is very important that you stay on top of your bills. Here are some suggestions for making sure you pay bills on time.
First, you need to make sure all of your bills are entered into your accounting/bill pay software. Be sure and note all of the due dates from your bills, and add them to your software. You may want to keep a running calendar of when each bill is due. After you pay it, you can check the bill off.
Another suggestion you may want to try is to update your bills and pay dates on a regular basis, such as the close of the business day. While you’re updating, be sure you determine which bills are due upon receipt, and which bills are net 10, 30, or 60 days.
When you are able to keep careful track of your bills, you are ensuring your business stays open for years to come.
Control the Money: Incoming and Outgoing
One of the reasons businesses fail is because the business owner cannot keep records of cash flow effectively. Often, this happens because a business owner doesn’t keep accurate records of his or her cash flow. For example, a person who owns an automated car wash doesn’t keep their business account and their personal banking accounts separate, which leads to confusion and debt.
You need to control the money going out of your business. You can do this effectively on a weekly basis. Not checking the cash flow out of your business can cause trouble down the road. One hint: it never hurts to do an opening balance for your cash flow each day, and a closing balance each evening. That way, you know exactly how much money is coming in and going out each day.
Many businesses run cash-only, while others don’t have cash deposits at all. If you are doing a cash business, you may want to make small deposits daily or three times per week. However, if you run an all-cash business, you will likely want to make daily deposits, so that your business doesn’t become the victim of a robbery. Cash is incredibly hard to track, and thieves take advantage of that to rob business owners.
Keep up with your invoices. You will want to send out invoices weekly, especially if you have customers who are slow about paying. If you know exactly what’s due, you’ll be able to manage your business money more easily. One way to help track your money more effectively is to have a special category for clients or customers who are frequently delinquent payers. In fact, you may want to hire someone to manage invoices of customers who are behind, and follow up with phone calls or emails to ensure payment.
If you are incredibly organized, you may already have a strategy for money management. Each pot of money you have to put aside for your business needs a label. This will make it easier to track your spending. Not sure how to accomplish this? Here are some ideas for how to label your money effectively.
One great idea to track spending is to give each item detail a color. That way, it will be easier to figure out your business expenses. This is a great idea for people who are visual learners, but the notion of color coding can work for many business owners.
Many platforms (such as Microsoft and Google) offer templates for business expenses. If you use a premade template, don’t forget to make the categories specific to your business. For example, if you don’t do payroll, there’s no reason for it to be one of your spending categories. Creating your own categories can make keeping track of your money easier.
Tracking Inventory Is Key
If you buy or sell anything—including services—you have inventory of some kind. Inventory is another area that directly impacts your business success. If you aren’t sure what inventory you have, and what inventory you have sold, you will not be in business for long. You need to keep track of your inventory, because your inventory is a money generator for many business owners. For example, if you have a popular product, you will need to keep it in stock to satisfy your customers. You may want to try a simple inventory form to help you keep your inventory current.
Also, there are different types of inventories. You may have raw materials that you use to make other products to sell. You may also have already-made goods to sell. If you have a very popular item for sale, you may order excess inventory to meet the demand. You need to keep track of each type of inventory you have at your business. If you have trouble keeping track of the types of inventory you have, it may be a good idea to keep a spreadsheet with all of your inventory types in one place.
There are also inventory control programs available for small business owners who are tech-savvy. However, many small business owners don’t feel they have the time to use a program to track all their inventory. While tracking inventory can be difficult and time-consuming, it is extremely important to your business. Tracking inventory gives you control of both your accounts receivable and payable, as well as protecting your business from fraud.
Run Reports Weekly
Be sure you run reports each week on your accounts payable and receivable. This report will help you project your week ahead. If you get behind on running reports, you may lose valuable business, which no business owner ever wants to have happen. Running weekly reports acts as a check up to see how your business is doing.
You may want to set aside a part of the day at the same time each week for report running. You may want to block that time off on your calendar so that it is dedicated to your business’ finances. If you have a time blocked off on your calendar, you will probably be more faithful with running your reports. Many business owners close their doors so that their employees don’t disturb them while they are working.
Don’t Forget About Payroll
Unless you are your only employee, chances are you have to pay several employees—or hundreds of employees—on a regular basis. How do you manage payroll? Many small business owners leave their payroll to a payroll service, or to a software program. Even if you have payroll software, that doesn’t mean you can neglect checking your payroll. This is important for employee satisfaction as well as to prevent fraud. Small businesses lose millions of dollars yearly due to payroll fraud.
While you are running your accounts payable and accounts receivable reports, you may want to run a payroll report as well. Finding and fixing payroll mistakes early will save you time and headaches down the road.
Let Protea Financial Help with Your Bookkeeping Tasks
Small business owners have a lot of demands on their time. You are constantly looking for new employees to hire, marketing to customers, plus using social media to increase your brand loyalty and customer satisfaction. However, while you are running around making sure you keep current on customer service and marketing, you can’t neglect the financial aspects of your business.
If you find that you don’t have enough time to take care of the everyday finances for your business, you may want to think about streamlining your financial work. You can hire a company that can manage your payroll, your invoicing and your inventory. If you’re considering assistance for your business finances, contact Protea Financial. We can work with you and your business to make it run smoothly and efficiently.
Here at Protea Financial, we have multiple types of financial experts who can help with your daily, weekly, or yearly bookkeeping tasks. Let us take them off your plate so you can focus on your business!