One of the most important things a small business owner needs to learn is the basics of accounting and bookkeeping.
I mean if your business is not turning over a profit, how would you know?
For someone that is not good with numbers, I struggled a lot with the concept of accounting and bookkeeping. I still do until I was forced to get my acts together and learn it once and for all. I’m not exactly a pro yet but I like to think I’ve got my books handled for now until I can afford an accountant.
So, here are five tips that have helped me that can help you too as a small business owner:
1. Start with Excel
It’s so easy to get overwhelmed with all the tools and templates available for bookkeeping. But I’ve noticed that sometimes it’s better to start with what you’re familiar with.
Most of us have a basic knowledge of Excel so you should start with that. Make sure you enter all the money that is coming in and all the money that is going out. Don’t forget you can also use it to create monthly budgets for your business.
2. Track every single expense
One of the key things you need to do for your business is to track your expenses. If possible, keep all receipts and tellers. If papers are too stressful to track, download an expense tracking app. You can never go wrong with one.
Tip: If you’re in Nigeria, use the Reach app to track your expenses.
3. Separate personal from the business account
Whether you admit it or not, you’re not your business so you should treat it like a separate entity. Don’t be tempted to use your business account for personal expenses.
Once your business starts making money, put yourself on a salary. That way, you can curb the temptation to dip into your business account.
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4. Embrace technology
As a small business owner, you should be thankful for all the apps and software that are available at your disposal. It saves you a lot of money you would otherwise have used to hire a professional.
Once you get a hang of them, the accounting software is pretty easy to use.
5. Balance your books regularly
Between your Excel sheet and your bank statement, there needs to be a reconciliation. Every month, try to balance your books by reconciling all your accounts with your software.
It’s so easy to make mistakes manually when using Excel so it’s better to use your accounting software where you can upload your bank statements and reconcile your accounts accurately.
Tip: Wave is a simple accounting software you can use.
When your business begins to scale, don’t hesitate to hire the services of a small business accountant.
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