Bob Wang is passionate about empowering individuals and organizations to achieve their dreams. Bob founded Legacy Advantage in 2015, a small business bookkeeping firm dedicated to helping entrepreneurs succeed.
If the moment the mere mention of “bookkeeping” makes you feel wholly and utterly out of your depth, don’t worry. In the vast world of business services, there are skilled professionals who specialize in small business bookkeeping and can manage this task for you.
Startups are understandably tight on funds, but rest assured, you don’t have to invest millions and bring in a hotshot CFO during your startup phase. What you do need to do is implement a few key practices to ensure that a basic bookkeeping infrastructure is established.
1. Separate Your Bank Accounts
Since many entrepreneurs invest their own personal funds into their startup, they often make the mistake of using their personal bank account for business transactions. Don’t do this. Establish separate chequing, savings and credit accounts for your business. If you’re using personal funds transfer these to your business bank account as a cash injection. This eliminates confusion, and ensure that, if nothing else, at the end of the year you can send your accountant a full record of your bank statements.
2. Invest in a Bookkeeping Method
However you choose to record your transactions, it’s important to set up a methodology and then follow through. If it’s within your means, consider purchasing a bookkeeping and accounting program like QuickBooks Online, Sage, or Xero. These programs offer useful guidance and enable you automate a fair amount of the bookkeeping process. They can be integrated with your bank accounts as well as shared with your accountant. If this isn’t possible for you at the moment, then the bare minimum would be to create and maintain an Excel document to record all of your sales, purchases and payments.
3. Manage Your Receipts
When you make a purchase related to your business, get the receipt. Got it? Good. Now, do not store that receipt in a shoe box, wallet, purse or other bottomless pit of crumpled paper. You will forget what the receipt was for, or worse, lose it and therefore the chance to be reimbursed. At the very least, photograph every receipt and save it to central drive so that you have digital backups. Ideally, you should invest in a mobile expense management application like Receipt Bank, HubDoc or Expensify. These provide cloud-based backups, tagged archives, automated data entry and more.
4. Set Up a Payment Gateway
The easier you make it for your clients and customers to pay you, the more quickly you will be paid. What gateway(s) you use will depend on your business model, and there are a number of tools out there from cloud accounting tools like QuickBooks, Sage and Xero to online tools like PayPal and Stripe and applications like Rotessa and Plooto. Each tool works a bit differently, but the proper mix will let you set up credit card and pre-authorized payment options that help to ensure fast and efficient payment.
5. Use a Project Management Tool
There are a variety of project management and CRM tools on the market, some paid, some free. Whatever your current budget, there’s really no excuse not to implement one of these programs. They’re instrumental in project tracking and client database management. The latter can be especially important if you are not yet storing your client information in a program like QuickBooks.
Last, but certainly not least, seek out a professional accountant, bookkeeper or both as soon as possible. If you can’t afford to hire someone in-house, there are outsourced options. And if that’s not a possibility for you just yet, then even a consultation and assessment can help you to set up preliminary bookkeeping tools, techniques and processes that will put you on the right path. As your needs and resources expand, you can build on this foundation.