In terms of profitability and longevity, the bookkeeping arm of a company is one of its most important components. All of the main elements of a business that functions efficiently, from accountability and legal compliance, to productivity and service, depend solely on bookkeeping systems.
With this in mind, improving upon a business’s bookkeeping methods and systems could bring them a whole host of benefits, and here are five simple ways to do exactly that:
- Back up all purchases with paper receipts
Paper receipts aren’t just helpful for making sure that all financial transactions are properly recorded in the businesses bookkeeping system, they are also required by the IRS as supporting evidence. From sales receipts and deposit slips, to invoices and time cards, having formal documentation of transactions in the bookkeeping system, can help a business back up all of its entries.
- Build solid relationships with sellers
If you regularly make purchases from the same vendor, it’s always worth talking to them about the possibility of special pricing or loyalty discounts, or even payment terms that would help the company increase their cash flow and free up assets.
- Weigh up depreciation against first-year expenses
Allowing a business to write off the full cost of something it has bought, the first year it’s put to use, instead of depreciating it over it’s useful life, the tax code should be scrutinized to make sure you’re getting the most out of any potential allowances. However, there are set limits to keep in mind, and first-year expensing isn’t always advantageous for a company. To find out if it’s the right choice for your business, consult with a tax professional.
- Hire a professional bookkeeper
Hiring a bookkeeper (or working with an outsourced service provider), can help ensure that your books are always up-to-date and accurate, giving you the best possible opportunity of making a profit and being able to develop a robust plan in terms of long-term finances.
- Limit who can access your business records
While bookkeeping services typically have robust security systems in place to help keep your data safe and secure at all times, it isn’t something that you should take for granted. You should firstly ensure that you have put in place a system of checks and balances to safeguard against the threat of a security breach, and that it works efficiently to help prevent any missed errors, too. It’s worth remembering that no matter who you hire to help with your bookkeeping responsibilities, your tax obligations are ultimately your own, as you are the business owner.
No business can ever be a success on a long-term basis without strong bookkeeping methods, and it’s always worth devoting a certain amount of resources to this arm of the business. Whether you hire an in-house bookkeeper, or hand over the reins to a team of professionals who can handle the work remotely, one thing is for sure: it’s never worth trying to save money by tackling your own bookkeeping.