Startups and small business owners spend 12-14 hours a week on an average on book-keeping functions. Bookkeeping includes recording, organizing, classifying and summarizing of the business transactions. Accounts Receivable/Payable, Salary & reimbursements, rent payments are some of the common recurring business transactions. Most of the times, these become tedious and time taking. Additionally, the taxation and other legal implications might seem too complex to understand. Sometimes the business owners are not even aware of the applicable regulations on their businesses. Combined effect results in non-compliance which straightaway brings the business in the radar of IRS. So, how to avoid this scenario? Read on to know more about how to simplify bookkeeping for your business.

1.Go ONLINE – NOW-Get an online accounting software

You can manually maintain your business books. Manually post every expense- first to journal, then to ledger; then prepare a Trial Balance; then prepare financial statements. Then calculate financial ratios. These…or you can simply opt for an automated customized online platform which does these for you by itself.

There are various advantages of shifting your books to the cloud. These include:

• Synchronization and automation of your data. In an online software, you simply need to enter the data, create classes of your transactions and post your entries in provided format. All subsequent classifications, calculations, and processing are done by the software automatically.

• Online software also allows you to integrate your business functions. For example, Quickbooks provides an integrated platform for Invoicing as well as accounting.So you do not have to take up multiple software for multiple requirements. This simplifies the entire process and also helps in the centralization of data.
• This software has integrated management decision-making tools. These tools make instant reports, insights available at fingertips. Calculation of ratios, generating of data charts, graphs help in understanding the business curve which in turn helps in projecting business growth.

The by-product of the above functions is that it increases the accuracy of financial data by minimizing clerical and conceptual errors.

Some standard and popular online software include Quickbooks, Xero, ClearBooks, etc. A small tip- before fixing on any software, sign up for a free trial version and check what works for you.

2.Track your receipts – Disciplined Invoicing

Wouldn’t it be great if someone reminded you that you have to collect your dues from John? Or that John has made part payment of your invoice? Wouldn’t it be great if you exactly knew how much to expect at what dates every month?

You can avail all these features if you opt for an online Invoicing platform. Proper invoicing is the key to run your business in a hassle-free way. It provides a record each transaction that happens and the details of the party with whom this transaction is entered into. An invoice is the first step to effect a business transaction. Hence, a proper invoicing system not only ensures a steady flow of resources into the entity, it also ensures proper processing of financial data.

Although invoicing can be done manually, yet online Invoicing is always more advisable due to obvious reasons. Manually or online, few essentials to further simplify the invoicing system and make it more effective include:

• Maintain a proper filing system for the Invoices, forwarding receipts, customer receipts, if any
• All relevant details like the party name, address, contact details, tracking number should be on the face of the Invoice
• Document every discussion with the party regarding the invoice. This created an evidentiary background in case of disputes
• If you are maintaining invoices manually, make sure that you have proper backup systems in place. In the case of online platforms, backup is an inherent feature
• Make sure that the staff deputed for Invoicing is qualified enough. Keep rotating members if you have a full-fledged invoicing team. This helps in detecting frauds and errors in the team
• Take some time out per week and get into systems personally if you are a small business owner. Do test checks, run samples. This will help you in understanding the underlying basic concepts. It will also help in excavating frauds, errors or any distraction from set processes.

3.Use technology -more technology – and more technology

This world is high on technology. Today there is an app for almost everything.These crazy millennials are coming up every day with crazier ideas, applications, and programs.These innovations are making everything more and more automated.So why not use these for your business too? Us an app to track your expenses, prepare a budget, check deviations, study deviations. Integrate your credit card/debit card, bank account to your accounting software. Use cloud servers instead of local servers. This is cheaper, easier, corruption free, enabling you to access your records anytime anywhere.

4.Demarcate yourself from your business-Use separate bank accounts

This perhaps goes without saying. That is the reason I have given it the second last priority.You and your business are separate entities. Particularly if your business is a registered entity like a company or an LLC. Separate the finances. Create a separate bank account, get separate credit/debit cards for your business. This will make your life a hell lot easier in the tax season.

Bookkeeping does not necessarily have to be a tedious job. A bit of planning and a lot of technology can make it a hassle free process, if followed in a disciplined way. Let us know which of these helped your business??