Best Bookkeeping Habits for a Successful Business

Handling your personal assets doesn’t need a lot of work. You likely have at least several monthly payments, several investments, a retirement account, one savings account, and one checking account.  

On the other hand, there are a lot of things you have to think about when it comes to accounting and bookkeeping for business purposes. Clients and employees are depending on you. This means that the risks are much bigger.  

Hiring professional accountants Dartford can really help. However, there are a lot of practices that you can follow. Here are some of them: 

Control Your Accounts Receivable and Accounts Payable Meticulously 

By maintaining perfectly your accounts payable and accounts receivable, you can easily capitalize on your cash on hand. To take advantage of early payment rebates and avoid late fees, you should pay the right amount on time. To lower days sales unresolved, immediately send invoices and follow up on any past due accounts.  

Optimize Your Accounts Chart 

To monitor expenses for compliance and tax purposes, almost every business has an alphabetical and simple accounts chart. However, using your accounts chart as the foundation of an accounting management tool is the best practice here. This will help you monitor your return on investment for expenses, your breakeven point, and your client acquisition expenses.  

To help you monitor expenses to acquire a client, you should group your marketing and sales accounts. To help you see what it costs just to keep the lights on, you should separate your G and A (General and Administrative) costs. To show you the discretionary expenses you could lower in a downturn, you should also separate Industry or Product-specific expenses.  

Track Expenses Using Accounting Software 

You need to have a complete record of every expense your business makes. This means that you have to save and record receipts on a daily or at least weekly basis. Day-to-day tasks will place a huge strain on your time if you do not have a reliable cloud-based expense technologies and core accounting software system. As your business grows, this burden will only become bigger if you do not utilize this technology.  

Build Internal Controls 

To lower the chances of fraud, you need to build internal controls in the bookkeeping procedures and policies of your business. This includes dual control for processes that include receiving or making payments of any form. For instance, you need to have the 1st worker write the check, the 2nd worker to settle the bank account, and a 3rd worker sign to approve the payment.  

Separate Totally Your Business and Personal Finances 

You need to make sure that you and your workers aren’t purchasing things for personal use using the funds from your business. It will immediately cause problems in the cash flow if funds aren’t allocated precisely. This will also cause auditing and tax filing issues.  

You are probably handling all the payments and purchasing yourself if you’ve got a small business. While you may be the only individual accessing funds, you need to keep your business and personal finances separate totally.