How can you keep your small business books in order?

Failure to keep your personal and business financials separate can cause legal issues and can eliminate some of the protections that a LLC provides for your personal finances and property

Cash accounting will be easy when the business is small or starting, teaching the art of eating what you kill without complications of accrual accounting. As the business grows you then expect other elements like your payables and receivables to emerge and evolve to a level where proper tracking will be required in order to keep up with working capital requirements. Saying this will mean that, as the business grows one is expected to engage proper accounting professionals to migrate from cash accounting to accrual accounting for a proper and true picture of the business financials.

Keeping your small business books in order means organizing and keeping track of all the money that comes in and goes out of your business. Imagine you have a piggy bank where you put your money. Every time you get some money, like when you sell a toy to a friend, you put it in the piggy bank. But you also spend money on things like stickers or colored pencils. You take the money out of the piggy bank to pay for the things you want. For a small business, it's just like that, but instead of a piggy bank, you use a special book called a ledger. You write down all the money that comes into your business from selling things and all the money you spend to buy things.

There are many options, but without a solid cpa you would be lost. The best money you will spend is on your accountants! Your accountant can advise you on what they prefer you use, and at tax time you won't be sweating!

I think timely entry is more important than software. Delay in entry creates much larger problems afterward. Don't forget to connect your banks with the software as Lara Manton mentioned in her comment.

In my experience, whilst paper might seem the cheapest and easiest way, the right accounting software can be a great benefit to businesses. For starters if you connect your bank it means you won’t forget any expenses and can keep track of everything going out as well as who owes you money. Not just that but you can get a lot quicker and more accurate idea of what tax you’ll have to pay, meaning it won’t be a surprise at year end. A lot of them come with receipt apps that are as easy as taking a photo and also have tools to help your customers pay you quicker.

Once you start a business you should keep in mind that business books are not your personal pockets and it must be treated separately! For business, you have to either use a business account on a business title or for a very small business you may consider one personal account that is dedicated for business transactions. Classification of expenses between personal and business shall be adapted to avoid any mis management otherwise you would not be able to analyse your business from financial perspective

I've encountered many small business owners do their books when the need arises, like when tax season is coming or when they need a loan or when they are winding up the business, etc. What I found out is that most of these business owners do not follow any system or workflow for bookkeeping for many reasons. Some are just busy, some don't know what to do, and others just doesn't have the budget to outsource. My advice for keeping books in order, regardless of the situation, is to put in place and follow an effective and efficient bookkeeping system or work flow.

To me it's all about keeping your costs minimum when you're a small business. Bookkeeping is as essential as any other part of the business and needs resources and time to be done properly. I'd like to share some humble tips as per my knowledge (and word limit). 1. If small business owner can manage time, they should do it themselves. Business is small, entries are few and would probably take couple of minutes to record in a spreadsheet. Learning this skill will also be beneficial for themselves in life. 2. They can hire a college student on part time to do this work for them. It would benefit both parties. 3. They can use services like Upwork to outsource bookkeeping at cheapest rates. But I'd advise them to be vigilant for data privacy.

Without proper accounting system in any organisation is like having tasteless food, fragranceless perfumes and colourless flowers.

In my experience the detail of the your business is within the data of your accounting system. Scrutinising it on a regular basis will eliminate issues at year end.