Simple and effective ways small businesses can ease the time and cost of bookkeeping
You may not have a passion for bookkeeping, but keeping well-organized business books will simplify your operations in nearly every aspect of running and growing your business. Here are some simple but effective ways to keep better business books.
Ease payroll pain
Experts at PwC and ADP estimate that “indirect costs” of payroll, like collecting and approving employees’ hours, calculating pay and benefits accrued, and preparing and distributing paychecks can cost smaller organizations as much as $10 per paycheck.
Take advantage of low-cost automated payroll apps that allow you to process payroll from a mobile device, and require only that you enter the hours an employee worked each week once you’ve entered basic employee information like social security number and withholdings or contributions to health or retirement accounts. Additionally, many online payroll tools equip you to distribute payments to employees electronically, reducing costs and the time it takes for your staff to be paid.
Manage your payroll process further by ensuring that you have the information you need from anyone you hire before work commences, including a signed Form W-9 from independent contractors and a Form 1099-MISC documents if you expect you’ll pay more than $600 in a tax year to professional service providers like attorneys, accountants or maintenance contractors.
Focus on cash flow
Managing appropriate cash flow equips you to maintain operations through slow business cycles, but it can be tough to do when you’re just starting out, or have recently adjusted your operations and are uncertain of how your new business model might ebb and flow.
By taking advantage of custom reports your POS system provides, you develop an accurate view of the critical business metrics that contribute to the financial health of your books, including cash and inventory on hand, staffing expenses, sales, cost of goods sold, and accounts receivable and payable balances.
With an all-encompassing, real-time look at your businesses operations, you can course-correct before you’re in the danger zone of lacking the cash you need for critical financial obligations.
Make expense records mobile
Though you must maintain original “source documents” for business-related expenses you’ll claim on taxes (e.g., marketing, business travel, meals, entertainment and continuing education), there are many affordable expense-tracking apps that allow smartphone and tablet users to take a snapshot of signed documents, receipts and even travel mileage logs, for upload and organization to a cloud-based filing system.
Having such information stored virtually can simplify the process of reconciling expenses, reduces math errors, and can contain the costs a bookkeeper might otherwise charge to organize such information for tax filing.
Choose systems that are compatible
While managing your books manually may seem adequate when your business is small, automated account systems can significantly reduce the time you must dedicate to administrative work, in addition to potentially reducing the billable hours you pay a third-party financial professional to do similar bookkeeping functions.
Though automated accounting systems typically require that you pay a monthly fee for service, the value of being able to produce and distribute custom reports and allow an authorized third party to access your business’s financial records “in the cloud” can reduce the human error associated with manual bookkeeping — so you can devote more attention to revenue-generating activities.
Keeping accurate books is a critical aspect of running a business that is complaint in the eyes of the IRS, in addition to that fact that many vendors and financial institutions may want to see proof of your financial viability before agreeing to do business with you or extend credit. By taking advantage of some simple tools that ease the pain of bookkeeping, you can ensure that you’re running a financially equipped operation, while streamlining the costs associated with business accounting.
Tim Flachman – CEO at Bepoz America
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