Small Business Accounting Basics: 5 Tips to Get Your Books on Track
If you want to give your childcare business a strong financial foundation, then you need to get your books on track. When you keep your financial books organized and up-to-date, you can get a clear picture of your business finances and make better financial decisions. In this article, we offer five tips for getting (and keeping) your books on track. Read on to find out more.
Why Accurate Books Are Essential to Your Childcare Business
Bookkeeping is the process of recording all the financial transactions for your business. When it’s done right, accurate bookkeeping will paint a picture of the financial status of your business. Accurate books will tell you the current financial condition of your company and help you forecast your financial condition for the next month, next quarter, or next year. When it’s done wrong, messy and inaccurate bookkeeping can lead to a plethora of problems and can even sink your business if you don’t get control of the situation quickly. The bottom line is, whether you manage your books on your own or hire a professional to do it for you, staying on top of your books is absolutely critical to the well-being of your childcare business.
Following are five tips to help you get (and keep) your books on track.
Tip #1 – Hire a Professional
If your books are a mess and you are struggling to find the time, energy, and motivation to get them in order, you may want to consider hiring an accountant. A professional accounting service, like Honest Buck Accounting, can help you clean up your books and create easy reports that you can access on-demand. A professional accountant can help you streamline your invoicing and receivables so you can save time, decrease errors, and get cash in the door more efficiently. An accountant can also help you manage your payroll processing and stay compliant with changing requirements. Another way a professional accountant can add value to your childcare business is in the area of tax preparation and compliance. The professionals can help you maximize deductions and credits that apply to your business and ensure you can avoid risks and penalties. Finally, an accountant can help you with quarterly and annual forecasting. He or she can help you plan ahead and determine where your business is going to be financially in three to twelve months.
In short, a professional accounting service can save you a lot of time, money, and stress when you leave your financial books in professional hands!
Tip #2 – Use the Right Software and Services
Another way you can keep your books up-to-date and accurate is when you use the right software and services. Two of our favorite services are Bench and QuickBooks Live. Bench is an online bookkeeping service that helps small business owners by offering monthly bookkeeping, tax advisory and filing, catch-up bookkeeping (for business owners who are less than two years behind on their books) and “retro” bookkeeping (for business owners who are more than two years behind on their books). Similarly, QuickBooks Live is a virtual bookkeeping service that offers the expertise of certified QuickBooks ProAdvisors, many of whom are CPAs, in the areas of cleanup and setup of existing books, ongoing bookkeeping, essential reports, and tax-ready books.
These reputable services offer great value to small business owners, and they can be a great option for childcare business owners who know they need to work with the right software and service providers.
Tip #3 – Make Bookkeeping a Habit
No matter if you decide to tackle your financial books yourself, hire a professional accountant, or use a virtual bookkeeping service, you need to make bookkeeping a habit as you run your childcare business. Set aside some time once a week or once a month to do your regular bookkeeping tasks. Use this time to review your financial statements, reconcile bank statements, enter any missed transactions, and more. When you grow accustomed to regularly looking at your books, it will be easier to keep them accurate and up-to-date, as well as catch errors and discrepancies.
Tip #4 – Separate Business and Personal Expenses
One of the most important steps you can take to clean up your books is to separate your business and personal expenses. Simply put, it just makes good business sense to keep your business expenses separate from your personal expenses. For one thing, it’s easy for transactions to get mixed up when you use the same accounts for business and personal spending. Also, if you are running a corporation or LLC, you don’t want to be held personally liable for business debts when you mix business and personal finances. Finally, bookkeeping becomes a nightmare when you are constantly trying to determine whether an expense belongs in the “business” category or the “personal” category. Use separate accounts.
Tip #5 – Keep Track of Your Documents
Our last tip to keep your books in order is to keep track of your documents. Whether you choose to store documents in a paper filing system or a digital filing system, you should have an organized storage method for financial statements, records, and receipts. Remember that when tax time rolls around, it will be your responsibility to provide supporting documentation for your financial reports. If you choose to use an online bookkeeping service, like Bench or QuickBooks Live, you can upload and store digital versions of receipts and other documents within your bookkeeping software.
It’s important to remember that your financial books are the heartbeat of your childcare business. When you make bookkeeping a priority, you are choosing to build a strong financial foundation for your business. Accurate and reliable books will help you attain financial peace today and in the future.
The experts at Honest Buck Accounting are here to help childcare business owners like you clean up your books and streamline your financial processes. Don’t wait until tax season (our busiest time of year) to reach out to us! Schedule a call today to learn more about our accounting services and discover how we can help you get your books on track.