Understanding the ins-and-outs of small business bookkeeping isn’t always easy. But it’s a vital part of stressing less and earning more when you’re self-employed.

According to the article by CarefulCents, as well as our experience, even though you can (and probably should!) hire an accountant to help manage your bookkeeping, it’s still important to understand how it all works. Small business finances can get complicated quickly and having a good handle on what’s going on every month will give you confidence about your money.

That’s what being a smart and financially savvy business owner is all about.

Here are 7 simple tasks to incorporate within your bookkeeping for small business tasks every month.

1. Use simple bookkeeping software

Yeah, everyone should use some sort of bookkeeping software but finding the right one, is a whole other question.

It’s important to have a backup, especially if your accounting information is stored in the Cloud or online. Don’t put yourself in the position of losing all your financial information in the event you make a mistake or your program crashes.

If you find the idea of starting and setting up the new software daunting, then give us a call. We can show you the in’s and out’s of the best programs. After that, you can continue to use our services on a monthly basis or we can train you to be able to use the programs on your own!

2. Categorize business transactions

Keep all of your business and personal bank accounts separate, including your savings accounts and credit cards. This way you’re able to organize all of your business transactions separately from your personal bills.

Even if you’re not an LLC, and are only a sole-proprietor, go ahead and open a second account at another bank and mark it for business-only transactions.

Review all of your account balances regularly, so you know how much money you have, and where it’s going.

3. Save and verify receipts

When deducting business expenses you have to be able to prove that the cost was business related. The best way to do this is by saving and verifying your business receipts regularly.

There are multiple ways you can do this:

Capture pictures of receipts with the QuickBooks mobile app and upload them to your QBSE account.
Store all of your receipts in one box, file or folder to be reviewed every month.
Use a scanner, to save all your receipts and link them to the correct expense.

4. Perform a monthly check-in

How much did you earn from client work this week? What big expenses do you have coming up?

Take time to have a quick check-in with your business finances every week. Not so much to check in on the numbers but to see the big picture of things.

5. Send invoices to business clients

A big part of freelancing is actually getting paid. But this is an often-overlooked part of bookkeeping that freelancers easily forget, or procrastinate. This is why automation makes a big difference… having automatic payment reminders be sent out will give the right push to get your money and you don’t even have to think about it!

It’s not always easy to talk about money, or enforcing clients to pay you for work you’ve completed. But it’s a very important part of valuing yourself and your services.

6. Set aside money for quarterly taxes

Another important bookkeeping task to do every month is set aside money for quarterly taxes. Although these are only due every quarter, your freelance business may be at a point where that tax bill is several thousands of dollars.

It’s a good idea to calculate each month instead of waiting until the end of the quarter.

It’s also a good idea to set up automatic weekly or monthly transfers from your business checking account to a savings account to cover this payment.

7. Plan ahead for the next month

It’s extremely difficult to plan ahead when you have irregular income, but there are things you can do to help ease the inconsistency.

Create monthly income and expense reports
Review pending payments from invoices
Look over your profit and loss statement
Calculate upcoming bills and projected income
Categorize all transactions in your bookkeeping software
Review all types of income and adjust
Calculate quarterly taxes to make sure you’re on target
Do an audit of all biz expenses and cut back
Keep a time journal to see how your time’s being spent

There are more ways to look back at the current month and plan ahead for the next month, but these are the basics. And going back to the importance of a software program; all these summaries and budgets and cash flows can be easily seen with a click of a button!!

You’ll be surprised how just keeping tabs on your money will really help increase your cash flow and your bottom line. The more you know about your finances, the better decisions you’ll make and ultimately be more successful.