Most small business owners approach bookkeeping-related tasks with trepidation, as it can quickly turn into a tedious and time-consuming activity, especially for those who don’t follow a workable strategy.
For SMEs on an upward trajectory, bookkeeping tasks can give way to more immediate concerns like those related to HR services, marketing, sales, or managing day-to-day operations, and the like.
Then again, there’s no escaping it; bookkeeping is a necessary part of any business venture regardless of size and scope. Taking the time to maintain accurate records will make BIR tax season running smoothly, which means fewer mistakes and chances of facing dire consequences as a result.
Keeping track of your expenses will also give you a clear picture of your company’s financial health, which in turn, will help you make sound business decisions for long-term success.
Simple Bookkeeping Strategies
SME owners often need to wear many hats to keep their businesses afloat and in the process, they neglect bookkeeping tasks.
Before long, tax season is just around the corner, and that’s when the tedium begins—having to sort through reams of paper, unearth forgotten receipts, and set aside a few days lest they miss the BIR deadline during tax season.
If that sounds familiar, you’re not alone. Some of the most common problems besetting Philippine small businesses include poor petty cash management, submitting insufficient or incorrect supporting documents, throwing away receipts, and non-recording of reimbursable expenses.
Fortunately, these mistakes can be avoided by following a few simple bookkeeping strategies we’ve outlined below.
1. Use Simpler Bookkeeping Methods When Applicable
If your annual sales and inventory totals to PHP 3 million and below, then you can opt to use the cash method of bookkeeping instead of the usual accrual method.
Sole proprietors usually fall under this category, so keep things easier and simpler for you by using the cash method.
2. Put Everything in One Place
Stop complicating things. For records, receipts, statements, and other bookkeeping-related documents, assign a dedicated storage box referenced by year.
Just drop in all the documents in their assigned year, and keep it close by where you can easily reach for it as needed. You can opt to go for a store bought box, but a shoe box can work just as well.
3. Keep Track of Expenses and Categorize Properly
It’s tempting to dump simply everything in one place and sort them out by category later, but those receipts can pile up fast—making categorization a laborious task.
Take the time to track every expense right after away. It will take not more than a few minutes to do this, as it would save you lots of time later on.
Track expenses that could be used for tax breaks for meals, entertainment, healthcare, office improvement, and the like.
4. Hire an Expert
Some business owners can be very hands-on in their operations—bookkeeping and accounting tasks included.
This might work at the beginning stages, but as your company grows, you won’t have as much time and energy to do the necessary work.
Consider getting either an in-house accountant or seek professional advice from consultants to keep your papers properly sorted out.
5. Try Automating
There are numerous apps and bookkeeping software you can use. From the usual Excel files to sophisticated programs like Quickbooks, FreshBooks, and WaveAccounting, you can quickly turn the grunt work into an easy, automated task.
6. Set Aside Time for Bookkeeping Tasks on a Regular Basis
Taking as little as 10 to 30 minutes a week to take a look at your ledgers and update your books will save you a lot of time later on.
Make this a regular habit, as this will make it easier to stay on top of your expenses and have a clear picture of the bottom line.
7. Stick to a Budget
At the beginning of the year, come up with a workable budget and stick to it. That’s easier said than done, especially if you’re prone to impulse buying.
Don’t buy more office equipment if you don’t really need it, as this will save you a lot of regrets and headaches in the long run.
Having a clear picture of where you are financially is a crucial step in thriving as a small business owner.
You don’t need to do the tedious and time-consuming task of bookkeeping yourself when you can outsource it, as well as other tasks related to HR services to experts in the field.
These simple strategies will help promote business growth. Long term success is predicated on a healthy bottom line, and maintaining sound bookkeeping practices will help you not only survive—but thrive in a competitive business environment.
This article is written by Danella Yaptinchay. She is the managing director of Full Suite, a service company providing back end support to small businesses, which includes bookkeeping and HR services among others.
SELECT AN ARTICLE TO READ NEXT BELOW: