As a small business owner, you are most likely handling your books on your own. You also probably know they are not as accurate as they could be. Unfortunately, those books left unattended often lead to larger issues for your business.
Here are some of the signs you need a financial clean up:
General ledger errors
Customer and vendor invoice inconsistencies
Negative cash or credit balances
Unauthorized withdrawals
Missing retained earnings
All of these common mistakes are indicators your business is taking steps in the wrong direction and that it is time to clean up your books.
In addition to having a smoothly run business, keeping clean books helps you make better decisions, look more desirable to potential investors or partners, and is necessary should your business be audited.
If you are like many other business owners who know they need some assistance with their books, but don’t know where to start, here are a few tips to get you on the path towards cleaner books.
Use an Accounting Software, Like QuickBooks
Using accounting software is one of the easiest ways to get your books in order. Software, like QuickBooks, allows you to link accounts together, track expenses, and even send invoices all while keeping your financial data organized and in one place.
However, using accounting software is just the first step; you also need to be able to understand it. SIMPLY Financials PLUS provides customized accounting and bookkeeping solutions and specializes in helping businesses that use QuickBooks. To help you better understand your software, we also provide QuickBooks training based on your business’s unique needs.
See real-time financials
Produce meaningful reports
Maintain accuracy
Become financially savvy without wasting time
With proper training and a good understanding of how it works, accounting software, like QuickBooks, is incredibly helpful in getting and keeping your books in order.
Assess Your Problems
One of the most important things you can do to clean up your books is to figure out where the errors are.
In addition to the aforementioned signs that you might need some accounting assistance, you should also look for things like…
Late fees
Unexplained expenses
Overdue accounts receivables
...as indicators of a larger problem.
When you know where your issues lie, you can make timely adjustments to get them right.
Break Down All Expenses
One of the largest areas to maintain within your books are business expenses. Because there are so many, and purchases are often made by multiple people, there is plenty of room for error. If this is an area of your books needing work, try listing all the items out and figure out why you (or someone else) made the purchase. Then create a list of recurring expenses. This will show you where you are spending money properly, and where you are not.
If a recurring expense is no longer needed, get rid of it. If you are making unnecessary purchases, stop. If there are people spending more than they should, limit access to the accounts. Your breakdown of expenses will show you how to focus your spending.
Create a Budget
Once you’ve broken down your expenses, you should be able to see where you overspent and what areas may need to be adjusted. If you don’t already have a budget, now is the time to make one.
A budget is essential in keeping your books in order. It will help you focus your spending, making it more consistent while providing an overview of where you can expect to be spending money during the month/quarter/year.
Reconcile Your Transactions or Accounts Receivable
Accounts receivables can easily be forgotten about if they aren’t paid on time and can cause massive implications to your financials. Things like overdue payments, if not logged properly, will make it look like you have more money than you do.
Making sure every transaction and invoice is up-to-date will help your books stay in order. If you notice this is an issue, follow up on unpaid invoices and ensure returns are handled correctly (if you are a commerce business). This will give you the bigger picture of how much money you are planning to flow into your business.
Get Help Cleaning and Maintaining Your Accounting
Clean books help you keep everything in order and allow you to have a better understanding of where your business is heading. However, to fix or avoid issues in your books, you have to be proactive by using accounting software, assessing your problems, breaking down expenses, creating a budget, and reconciling your transactions or accounts receivable.
All of this comes easier when you work with a trusted accounting and bookkeeping service like SIMPLY Financials PLUS. We will help you learn to use tools like QuickBooks, point out areas you could be improving, and work with you to create a budget that makes sense for your business.
Contact SIMPLY Financials PLUS to learn more about the services we offer and how we can help you clean up your business’s accounting.