How to Streamline Accounting for Your Small Business

When a small business owner thinks about bookkeeping they usually feel confused and overwhelmed. All those files, payment deadlines, invoices, and calculations may cause you to start panicking if you don’t have enough experience. If this sounds familiar, don’t worry.

Streamlining accounting and bookkeeping systems is the best way to stay on top of your finances. It will boost your productivity while saving you money and time. Not to mention that it will seriously reduce your stress levels and anxiety.

Organized finances always make a good impression on clients, customers, and suppliers and help with your business’s reputation. It’s important for your confidence and understanding of your overall situation.

If you are interested in learning more about streamlining accounting for your company, you are in the right place. Today we will explore this topic and ensure your bookkeeping system is optimal for you. Let’s begin!

What Is Bookkeeping?

To put it simply, bookkeeping is a process in which you write down or record every financial transaction. You can do it manually or use bookkeeping software. You often need to hire a skilled bookkeeper to be on your staff.

Bookkeeping can also be done by a company you hire but you can do the job yourself as well if you are self-employed. In case your company is a one-man business you need to learn how to perform all the tasks regarding your finances if you want your company to run smoothly.

When you choose to hire a professional bookkeeper or a company they will have various duties and make your life easier. Here is a short list:

  • Recording every transaction that a business makes 
  • Making payments to vendors
  • Sending out invoices
  • Depositing all the checks your company receives
  • Managing bank accounts
  • Preparing monthly financial statements
  • Preparing year-end statements
  • Doing the taxes

Educate Your Team

Being organized and having a clean bookkeeping system isn’t the only important thing when it comes to streamlining your accounting. Never forget about the human element. It is essential for efficient bookkeeping and a clear financial situation.

Make sure your staff is educated and confident about the accounting tasks. Don’t forget that technology is constantly changing and that they need to learn new things every once in a while to stay on top of the game.

This is when recruiting an experienced bookkeeper or a service comes in handy. Sometimes you need professional help to keep your employees on the right track. Experts should cover all the bases with your staff and diagnose the problems. They should also teach them how to use technology and various programs independently.

When you are changing your software systems make sure everyone on your team is well-informed. Set some ground rules and encourage them to be proactive and stay on board.

Educate Your Team

Bookkeeping With Or Without The Computer?

This decision mostly depends on the size of your business. If you are the only person involved it’s possible, and even recommended, to keep manual records. However, if your business includes employees you should go with computerized systems since it would be a lot easier for you.

If your main goal is to streamline your accounting it’s best to go paperless. Paper bank statements, invoices, and sticky notes can be very difficult to organize and you will get more and more confused as your business grows.

Make sure you set in the automated and centralized bookkeeping system to ensure your accounting is running smoothly. Experts often recommend using cloud-based software systems for several reasons:

  • They allow the accountant to update information in real-time
  • They allow the whole team to stay on track and retrieve any information they need
  • There is no way a file or invoice will be missing
  • Employees won’t be wasting their time trying to find the information they need 
  • They simplify the entire accounting process, save your time, and reduce stress
  • All your information will be completely backed up

There is plenty of software that will work but the majority of professional bookkeepers recommend Xero for small businesses. They claim it’s the first step in streamlining your accounting.

Single Or Double Entry Bookkeeping – Which Should You Use?

Let’s explore this topic. What is single-entry bookkeeping? Well, it means you will make one entry for every transaction. It’s similar to a checkbook register. Entries for purchases and sales will be recorded (either as a positive or negative amount) and they are still considered to be single entries even if you have a two-column ledger. The important thing is that there is just one line for every transaction.

On the other hand, double-entry bookkeeping is used if your company tracks inventory or if it has payable and receivable accounts. Each account always has two columns and every transaction is recorded in two accounts. To put it simply – there will be two entries for one transaction.

This means a credit entry will be made to one account and a debit entry will be made to another account. For example, if you buy some pens for your office your bank account will be reduced by the cost of pens and that is the credit entry. The expense account for company supplies is the debit entry.

Categorize Business Expenses

Managing your finances can often be difficult and it’s no wonder you sometimes feel overwhelmed and exhausted. Money is coming in and out from various sources and keeping track of everything can be a lot of work. However, getting organized and differentiating multiple expenses will save you a lot of headaches in the long run.

Make sure you give yourself enough time to organize your sources of expenditure and revenue. The best way is to put them into various categories. Your main goal is to make things easier and faster for yourself and categories will save you a lot of time when you are searching for information, entering, or retrieving it.

Don’t forget to categorize your invoices and receipts and arrange them properly. This way you will avoid the creation of duplicate entries and prevent various problems. It’s important to arrange your taxes as well since these files tend to get quite confusing. Being organized is good for your business but it also helps you reduce your stress level to a minimum.

Having the correct financial data and a clear, simple accounting system is vital for your small business. Start incorporating some of these valuable suggestions and you won’t regret it. Streamline your accounting with ease and your business will become a success in no time.

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