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How Your Bookkeeping Business Can Help a Small Business Grow

how to bookkeeping for small business

First, check if your current clients are happy and feel you’re providing the best possible service. One surefire way to distinguish yourself from other bookkeeping services is to ask current clients to write testimonials on your behalf. You can add a testimonials page to your website small business bookkeeping to share these comments or request that they write reviews for you on listing sites like Yelp or Google. By being willing to reciprocate, you’re opening the door to potential new business. You may want to refer to our list of free business card providers as a starting point.

Finding a Bookkeeper

Whether you take on your small-business bookkeeping yourself or end up outsourcing to an expert, understanding the basics will help you better manage your finances. You’ll save time chasing receipts, protect yourself from costly errors, and gain valuable insights into your business’s potential. Proper record-keeping for small businesses makes the process easier and keeps you compliant with the law. You never want to waste time chasing down last month’s missing invoice, and you certainly don’t want to find yourself in trouble with legal requirements.

Best Startup Business Loans

how to bookkeeping for small business

You’ll also need to choose a bookkeeping software for your bookkeeping business. Some accounting solutions offer a bookkeeper or accountant edition specifically designed for bookkeeping companies to use both for their books and as a portal to their client’s books. With your accounting software and data stored online in the cloud, you can access your up-to-date accounts anywhere there’s an internet connection. Your Xero data is backed up regularly and protected with multiple layers of security. A bookkeeper is responsible for identifying the accounts in which transactions should be recorded. The income statement is developed by using revenue from sales and other sources, expenses, and costs.

Perform Journal Entries to Debit and Credit Accounts

For instance, its project accounting feature doesn’t allow you to compare estimated and actual inventory used, which is also the weakness we found in QuickBooks Online. Those who need this level of project profitability tracking should consider QuickBooks Enterprise if they also need inventory, or FreshBooks if they’re a service-based business. One of its drawbacks is that it doesn’t allow you to set up and manage multiple companies under a single account. For this, we recommend QuickBooks Enterprise—which is our leading multicompany accounting software.

  • There are some things you should consider when thinking about starting your own bookkeeping business.
  • Remember to be specific about when you expect to be paid by, but always remain polite and professional.
  • For example, you may have estimated certain invoices that are later solidified with an actual number.
  • Generally, if your assets are greater than your liabilities, your business is financially stable.
  • Xero’s online accounting software is designed to make life easier for small businesses – anywhere, any time.

The most common small-business accounts

how to bookkeeping for small business

The first step you’ll need is a business bank account, which allows you to keep your personal and business expenses separate. Bank accounts allow businesses to safely store their money and make transactions easily. There are several types of business bank accounts, each with its own purpose and benefits. If not done at the time of the transaction, the bookkeeper will create and send invoices for funds that need to be collected by the company. The bookkeeper enters relevant data such as date, price, quantity and sales tax (if applicable).

how to bookkeeping for small business

Businesses with many users can save money with Xero since they can add as many users as needed without any additional fees. We also like that FreshBooks can issue project-specific estimates that can then be compared to actual expenses, which isn’t possible with QuickBooks Online. This helps you determine whether you are over or under budget, which allows you to make the necessary adjustments to your project plan or budget if needed. Luckily, doola equips you with all the necessary tools and resources to handle your bookkeeping easily. However, they should not be relied upon as a substitute for professional financial advice.

  • Additionally, they allow easy data sorting and filtering, making it simple to find specific information when needed.
  • As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution.
  • By being willing to reciprocate, you’re opening the door to potential new business.
  • Among the software we’ve reviewed, Wave is the simplest and most user-friendly solution for businesses with basic accounting tasks.
  • Accrual basis accounting records those invoices and bills even if the funds haven’t been exchanged.

Best Accounting Software for Small Businesses

This inability to conform to GAAP’s requirements may not apply to very small businesses which only need to be able to illustrate a method of meeting reporting requirements for taxes and employees. Any company that must highlight cash flow retained earnings, or any other changes in a position financially must use a double-entry accounting system. Psst—to stay organized and make recording easier, remember to keep your personal finances and your business finances separate. Maintaining bookkeeping tasks is essential for the stability and success of small businesses. With so many moving pieces (including assets and liabilities, and income and expenses), small business owners must stay on top of it all. Probably the biggest immediate benefit that every small business owner will get from accounting software is that the software automatically connects to your bank.

  • A disadvantage of the cash method is that it only provides a short-term look at your company’s financial health.
  • At the end of every pay period, the bookkeeper will accumulate employee payroll details that include hours worked and rates.
  • To understand better who has paid and who still needs to pay, business owners must incorporate a system for accounts receivable, or how the company gets paid for delivering goods and services.
  • Plus, you can export your transaction information to a CSV file from within your Novo account.
  • It earned near-perfect marks for its support network because of the availability of QuickBooks ProAdvisors.

While a certificate is not a requirement to become a bookkeeper, some professionals pursue certification to show their skills to employers and stand out in their job search. Integrity and trustworthiness are important qualities to cultivate as a bookkeeper. Keep an organization’s financial data confidential and be transparent about your bookkeeping activities. Managing the general ledger is part of your daily responsibilities as a bookkeeper. You may determine if any payments are due, submit them, and record them in the financial ledger. As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution.

  • However, that’s not the only thing Zoho Books can offer as it’s also remarkable in other aspects, such as inventory and project accounting.
  • It’s really important to keep a close eye on cash flow, because if it stops, your business won’t be able to function.
  • For instance, ever looked at your bank statements and thought, Where is all the money we made this month?
  • With the right tools, you can feel confident managing financial transactions and helping your business grow.
  • Bookkeeping begins with setting up each necessary account so you can record transactions in the appropriate categories.
  • However, accountants are brought in when the business needs more strategic advice, especially as it relates to taxes and corporate or financial planning.

Separate your personal and business expenses

Keep your skills up to date, evolve the depth in which you know your preferred platforms and stay apprised as their features change, as well. You can always attend professional events, too, such as conferences and networking events. Don’t forget that investing in your business means investing in yourself. There are two pieces of the business plan that deserve a little extra consideration.