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7 Tips for Small Businesses to Improve Record-Keeping

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7 Tips for Small Businesses to Improve Record-Keeping

July 8, 2024

If your business falls under the category of small- or medium-sized enterprises (SMEs), accurate and organized financial records are crucial for both initial and long-term business success. It’s only through proper record-keeping that you can stay compliant with tax regulations, make well-informed financial decisions, and be fully up to date about your business’s financial health.

However, many business owners often struggle with organizing receipts, tracking their transactions, and managing financial records efficiently—especially if they don’t have the funding for a dedicated accounting department the same way a bigger business or a multinational corporation would.

To overcome these challenges and set a precedent for good financial housekeeping on the part of a company, here are some essential tips to enhance your record-keeping practices:

1) Utilize Cashless Payment Solutions

As many small business owners have found out for themselves, cashless payment solutions can significantly streamline the record-keeping process. Thanks to digital payment systems and solutions, transactions can be automatically recorded—which reduces the need for manual entries and the risk of costly accounting errors.

If you have an e-commerce website that caters to customers in the country, for example, you can install a payment gateway like the Philippines’s Maya Checkout. With Shopify and WooCommerce plugins from Maya Checkout, you won’t need a developer to integrate these plugins into your store. Meanwhile, small businesses with no e-commerce store yet can send payment links to customers using various messaging apps. Maya’s payment links feature a user-friendly interface that allows customers to pay for purchases using their credit or debit cards, e-wallets, or QR codes.

Aside from convenience and functionality, cashless systems also offer increased security, as they reduce the risk of theft or loss associated with handling physical cash. Lastly, digital transactions provide detailed records that can be easily accessed and reviewed by staff. These will make it simpler to track your business’s financial activities.

2) Keep Your Business and Personal Accounts Separate

One of the fundamental rules of good record-keeping for a small business entrepreneur is to always keep your business and personal finances separate. This separation simplifies your bookkeeping process and provides a clear picture of your business’s financial health.

As soon as you possibly can, open a dedicated business bank account and use it exclusively for business-related expenses and income. Explore a banking solution that will make it easy to record all transactions coming in and out of your business and, as a result, reconcile your records.

3) Track and Record Every Transaction

To maintain accurate financial records, you’ll want to be conscientious about the basics—i.e., tracking and recording every transaction. This includes all income, expenses, and even small cash purchases.

Use spreadsheets or accounting software to log transactions regularly. Consistent tracking is what will help you generate precise financial statements and simplify your often tedious tax preparations. This habit will also allow you to identify your spending patterns more closely, monitor your cash flow, and make more informed financial decisions.

4) Develop a Sustainable Document Management System

You’ll also want to create a sustainable document management system to store and organize your business records. You can start by categorizing your documents (e.g., invoices, receipts, contracts) and storing them in a logical and accessible manner.

Consider using digital solutions such as cloud storage to keep your documents safe and easily retrievable. Implementing a system where documents are regularly reviewed, updated, and archived will save time and reduce clutter related to paperwork. Such a system will also ensure that you can quickly find what you need when you need it.

5) Back Up and Secure Your Business Records

With the increasing shift to digital formats, ensuring the security and backup of your business records is more important than ever. To avoid losing your records, regularly back up your files using cloud storage solutions, external hard drives, or other reliable methods. This practice will protect your data from potential losses due to hardware failure, cyber-attacks, or natural disasters.

Don’t be remiss in implementing strong security measures such as encryption, secure passwords, and access controls to safeguard sensitive information and maintain the integrity of your records.

6) Invest in the Right Accounting Software for Your Business

The right accounting software can significantly improve your record-keeping practices and make them more dependable. As such, you should look for tools that suit the specific needs of your business. Whether it’s for invoicing, expense tracking, payroll, or comprehensive financial management, the software or app solutions you onboard should make record-keeping quicker, simpler, and more accurate.

Popular options include QuickBooks, Xero, and FreshBooks, which offer user-friendly interfaces and features tailored for small businesses. Tools like these may allow you to automate routine accounting and bookkeeping tasks, reduce errors, and provide real-time insights into your financial performance.

7) Consider Hiring a Professional Bookkeeper

While there are some small business owners who can handle their own bookkeeping, hiring a professional bookkeeper may be a wise investment for your company down the line.

A bookkeeper can use their expertise and experience to properly manage your day-to-day transactions, reconcile your accounts, prepare financial reports for you, and offer you valuable advice on financial management. If you delegate your bookkeeping tasks to a professional, you can also focus on tasks directly related to growing your business.

With accurate and organized financial records at the ready—and good record-keeping practices at the fore—you’ll be better equipped to ride out tax season and to exercise good financial housekeeping well beyond that. Improve your record-keeping now, and see the difference it will make to your business’s operations in the succeeding years.

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