Even if you’re a savvy entrepreneur who likes to keep on top of the numbers behind your business, the chances are that you don’t find bookkeeping to be the most enthralling part of your day-to-day grind. There’s so much to do, and so little time to do it in, that most of us end up making mistakes without even recognizing that there may be a problem.
However, the truth is that staying on top of your business finances can help you to become a more confident, and efficient business owner. Completed regularly, the right tasks will not only let you know that you’re making the right steps for your company, but you’ll also get the information you need to help your brand thrive and grow. Neglect these practices however, and your mistakes might fester, leaving you with a lot of work to do when it comes to making your business viable.
Following, we’ll outline some of the most crucial bookkeeping tasks you should be performing at least each month if you want to keep your business running smoothly.
1. Watch Your Bank Balance
Okay, so it might not be the most exciting activity in the world, but checking up on your account balance regularly can be one of the best ways to examine the health of your business. Set aside plenty of time every month (or even every week), to log into your account and see what’s happening in terms of ingoing and outgoing cash. If the amount you’re spending significantly exceeds the amount you’re earning, this could be a sign that you have a problem.
What’s more, if you’ve been keeping track of your expenses elsewhere, you can check that both sets of numbers match – avoiding erroneous mistakes later!
2. Summarize Your Expenses and Revenue
The best way to keep track of all of your expenses and revenue is with a cloud storage booking system. By automatically watching over all of your expenses and income, it will give you the information you need to ensure that all of the incoming and outgoing money is moving exactly as it should.
The idea is simple to ensure that you are regularly aware of how much you’re really spending and making each month. This information should help you to figure out when you need to start budgeting, and whether you’ve got existing trends for income one month to the next.
3. Save Important Paperwork and Receipts
If you’ve already installed cloud bookkeeping software, then this will help you to keep important invoices, receipts, and documents saved automatically. If not, then you’ll need to find alternative backup systems. Either way, you need a way to hold on to any documentation that might be important when tax season rolls around.
Remember that you can scan and save letters to your cloud system too – so that you have an extra digital copy in case something goes wrong.
4. Calculate Your Profit for the Month
Running a successful business isn’t just about keeping an eye on how much money comes in – You also need to take the total revenue of your business, and the expenses you have calculated using receipts and other means, and figure out your overall profit.
In simple terms, Revenue – expenses = profit – how much you actually made over the course of the month. If your number is negative, then that will be classified as a net loss. It’s shocking how many businesses have no idea whether their company is making an actual profit each month – and this information is essential if you want to grow your business and make smart decisions.
5. Make Plans for the Month Ahead
Once you’ve completed all the steps above, you’ll be able to start setting financial goals according to your past performance and your yearly budget. In some cases, you can find that it’s highly motivating to set a sales goal for the month – but don’t forget to factor in potential expenses you’ll need to plan ahead for.
Take all of the lessons that you learn through your month of bookkeeping tasks, and use them to move your business forward. Figure out where you can do better in the month ahead, and what more you can do to keep your business running smoothly.
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