Every business owner needs to know smart money management in order to stay in business. No matter how much revenue your company is generating annually, how you keep your books can make or break your business. A solid bookkeeping system ensures that your books are updated regularly and are available readily when needed. Those books are a true representation of your profit and loss. If you feel overwhelmed and anxious about managing your finances, you’re not alone. Many small businesses struggle to stay on top of their financial record keeping.
Check out these 5 bookkeeping tips that will help you run a successful consulting business in Aberdeenshire.
1. Keep your personal and business accounts separate
Separating your business finances from your personal ones should be the first step to take after you begin your consulting business. Set up your business account and credit cards right from the beginning and make sure all business transactions are made through these accounts.
It could be tempting to leave this task for later but keeping your personal and business transactions separate can benefit you in several ways, including:
- Avoid triggering an IRS audit due to blurred lines between personal and business expenses
- Simplify the tracking of business expenses for bookkeeping purposes
- Make it easy to identify your income versus your expenditure
- Quickly determine your cash flow
2. Hire a reliable bookkeeper
If you’re stressing over the idea of managing your own books or have little to no bandwidth to do so, it’s best to hire a reliable and proficient bookkeeper to help you out. Instead of looking for the cheapest bookkeeper available in Aberdeenshire, try to look for someone who has the skills and experience to make your life easier. You can even hire someone who can assist you remotely with your bookkeeping.
A good bookkeeper should be able to guide you through every deduction and tax advantage available, spend time with you, learn about your business, and share insights on how you can get the most out of your business. Since you will end up spending a lot of time with this person, find someone who is a good fit in terms of personality and values.
3. Dedicate time for bookkeeping
As a consulting business owner, you will have a million things on your plate and it would be tempting to keep bookkeeping for the last. We highly recommend you prioritize bookkeeping by taking time out of your schedule to keep control of your paperwork. This will particularly come in handy when you have to file your taxes. The best way is to comb through all your transactions and ensure they are accurate once you receive your monthly bank statements.
It’s essential to stick to a schedule and do it regularly to make the entire bookkeeping process as efficient, painless, and accurate as possible. Track the time you take to evaluate your books every month in order to assess the progress. If you feel that bookkeeping is not your forte, hire someone who can help you manage books efficiently.
4. Track your expenses
As a consulting business owner, you will have to track and categorize your expenses and revenue streams regularly. This will help you and your financial advisor to identify different strength areas based on the historical data. Reviewing these trends from a high-level perspective from time to time is an excellent idea for your business to succeed.
You can either use accounting software or utilize basic spreadsheets such as Excel to keep track of both one-off and recurring expenses. Some small consulting businesses also rely on a pen-and-paper ledger. Choose a process that works for you and stick to it.
5. Set financial goals and set the budget accordingly
Tracking your expenses regularly will give you enough idea about your annual budget requirements. But what if you face a requirement where you need to come up with a down payment for the office or invest in new software and equipment to help grow your business further?
Your best bet in such a situation is to plan for major expenses in advance. It would help you utilize the business credit and resources in the most efficient way possible. Accurate bookkeeping will not only give you peace of mind but also help you forecast realistic financial goals to hit the next quarter or year.
Conclusion
If you are running a consulting business in Aberdeenshire, then these tips will make your life easier in terms of managing and tracking expenses. These are the guidelines and best practices for simplifying bookkeeping so that you can spend more time running your business and less time worrying about finances. Adapt the steps that work for you and your team, and anything that isn’t a good fit for your business can be ignored. After all, the best bookkeeping system is the one that is in line with your business needs and the one you feel comfortable with for the long term.