Before we get to understanding bookkeeping issues and their possible solutions, it’s important to understand the difference between bookkeeping and accounting. A lot of businesses tend to use the terms interchangeably, but the two aren’t the same. For small businesses, bookkeeping refers to the process of maintaining records of financial transactions. Accounting, on the other hand, is the process of interpreting, analyzing, and summarizing an organization’s financial data.
Having established that, we’re going to explore some of the most common bookkeeping issues experienced by small- and medium-sized businesses and what the possible solutions to those issues are. Let’s get right into it.
1. Delayed Receivables and Cash Flow Management
Managing cash flow can be a significant challenge for many small- and medium-sized businesses. This is because effective cash flow management means staying on top of accounts receivables while balancing payments due. This means that you will have to promptly receive and record customer payments. To speed up the process, consider accepting electronic payments from customers because they are easily accessible and inexpensive. Consider setting up an automated email messaging system as well to send reminders to customers so that they pay up. Alternatively, you could also outsource accounts receivable to a professional bookkeeping service.
Furthermore, one of the most important things to do is to distinguish, from the very beginning, your personal finances from your business ones. This means that you need to make separate bank accounts and credit cards for each account.
2. No Record of Minor Expenses
Many businesses fail to record minor business expenses in their books. This makes your business’s cash flow appear stronger than it actually is. To ensure you have an accurate picture of where your business stands financially, maintain records of every business expense, no matter how small they may be.
3. Poor Payroll Management
Managing payroll can be complicated, and you can face penalties from government authorities for making mistakes. To avoid making errors in calculating tax liabilities, benefits, incentives, superannuation, and more, consider hiring a professional payroll management service.
4. Delayed Account Closing
Ideally, you should be closing your accounts every month in order to ensure you can easily access crucial figures and financial metrics. Delaying closing your accounts means you will not be able to access timely information, obtain useful insights, and make important business decisions.
We are a premium bookkeeping services provider based in Duluth, GA, that provides payroll services, bookkeeping data entry services, sales tax return services, and tax preparation services for small businesses.
Get in touch with our team at 3Alpha LLC for more information.