If you’re like any normal small business owner, you’re short on time and you’re probably thinking “What is bookkeeping and why do I need to do it?” Bookkeeping is a way for you to track and manage your business finances and is one of the many responsibilities that come with being a small business owner. You need to know what’s happening with your business cash flow and finances. It’s a major factor in your success. Here, we’ll cover some quality bookkeeping tips you can use to simplify your accounting process and make your life easier. 1. Keep Personal And Business Finances Separate Keeping your personal and business finances separate is important for a number of reasons. As a small business owner, it’s essential for you to know what’s happening with your business finances. It’s one of the basic metrics for determining if your business is successful. It’s much harder to know where you stand when you constantly have to decipher your transactions and guess whether it was a personal purchase or a business expense. This also becomes a problem if you're using business funds for personal expenses or are spending more cash than you have coming in. But you only see that clearly when there’s a separation between your business and personal funds. It doesn't just apply to your business bank account. Your business should have its own separate business account and business credit card to handle financial transactions. This avoids commingling business and personal funds. Keeping things separate helps avoid violating any tax laws that apply to your business taxes. It also keeps you out of hot water by limiting your personal liability in legal situations involving your business. This is by far one of the most important small business bookkeeping tips. 2. Keep Detailed Records The process of bookkeeping is difficult enough without having the appropriate records to reconcile the books. By keeping well-organized receipts, invoices, and other expenses, you’re making life easier on yourself. Your records don’t have to be complicated to be effective. If you’re fond of keeping paper records, keep a secured file cabinet with separate folders for bank statements, payroll, invoices, receivables, receipts, and other important financial information. You have the option to make your small business paper-free with accounting software that allows you to scan in your documentation or upload images to manage and organize your expenses in a few clicks. To get the most out of the expense side of your accounting software, you’ll want to look for features that allow the software to “read” the scanned information. Paired with AI, this helps you reduce the time it takes to enter data from your records and minimize errors. It doesn’t get much simpler than scanning or snapping a photo and reviewing for accuracy. Without the receipts to record what expenses your business paid throughout the year, you might have trouble claiming certain deductions at tax time. This might also result in extra time and costs associated with your accountant or bookkeeper. 3. Automate Everything That You Can There are already enough tasks that take you away from your business. With automation, you can streamline your small business bookkeeping tasklist and get back to doing what your business needs. The right accounting software is a great first step in this direction. With Lendio’s online accounting software, you get hours of time back by automating tasks like: Recurring invoicesTracking expenses through linked bank accountsSyncing invoices with bookkeepingUpdating payment statuses It saves you the manual entry of endless data into a spreadsheet. And there’s no more doing the sales tax and discount calculations by hand. The more bookkeeping tasks you automate, the more time you have for the other aspects of your small business. If you’re ready to save time and automate your bookkeeping system, check out Lendio’s risk-free plans and pricing. 4. Keep Track of Mileage or Car Expenses Do you travel a lot for your business? Keeping track of car mileage and expenses used for business purposes could add up in tax deductions or reimbursements. It’s important to keep impeccable records to take advantage of the deduction for 58.5 cents per mile in 2022. Each business trip must include the number of miles, the purpose, and the date. If you travel frequently, that can be difficult to manage without the help of technology. There are apps that allow you to track and log your business mileage by linking with your phone’s GPS. Remember that your business shouldn’t pay for your personal vehicle expenses. That's still part of keeping your personal finances separate from your business. 5. Keep Your Receipts When you make a quick run to the store for business supplies, it’s second nature to ball up your receipt and move on with your day. But if you plan on including that supply run as a tax deduction, then you’ll need to hold on to your receipts. The IRS actually requires receipts for all business tax deductions. This doesn’t mean you have to keep a shoebox full of faded receipts though. Lendio’s free small business accounting app helps you keep track of business transactions with an easy-to-use photo capture for your receipts. Just snap a picture, verify the info, and categorize the expense. That makes it simple to see where the money is going and even integrates those expenses into your financial statements. Let’s just say your accountant is going to be thrilled with you. 6. Set Aside Money for Taxes Each year, business owners get hit with tax obligations they weren't prepared for. At a minimum, you should be saving at least 30% of your income in preparation for your annual or quarterly taxes. Not saving money for tax preparation can result in fines and penalties. Nobody wants that. The best thing you can do is automate a portion of your income to be deposited into a business savings account. This keeps you from accidentally spending the money you’ve been setting aside while also staying prepared for taxes year-round. It’s easy to forget the tax deadlines for businesses when you have so much else to do. It might be helpful to set an automatic reminder for when the deadline rolls around each year. 7. Set Aside Time to Review The Books Even if you’re not the one doing the bookkeeping and payroll, it’s important for you to block out time to review the accounting records and financial statements with your professional bookkeeper. It keeps you up to speed with how the business is performing and growing. And if you’re doing it yourself, it’s especially important to stay on top of your small business accounting. Small business owners often find it challenging to manage cash flow for their company. Reviewing some of the financial statements, accounting reports, and accounts receivable data helps you uncover where the money is being held up. It’s best to do this weekly or monthly depending on what works for your business. Bookkeeping for a small business is time-consuming and complex, especially if that’s not your strong suit. If you don’t have the money to hire an accountant or bookkeeper yet, online accounting software might be the best option for you to get your accounting in order and save time on bookkeeping. Once you have that down, you can make the business decisions needed to continue making profits, serving your community, and delivering on your brand promise. 8. Keep Track of Invoices Keeping track of invoices is essential to understanding how cash flows into your business. It allows you to analyze trends and establish payment terms that work for you. Lendio's software makes it easy for you to create custom invoices that look professional and provides a clear view of what’s paid, unpaid, and past due. So you know which clients are current and which ones need a reminder email. In many cases, you can also integrate your invoices with bookkeeping software to produce financial records and statements that make managing your bookkeeping process smoother. If you’re still accepting cash transactions, there’s a way to track that with Lendio's software too. If you’ve been delivering paper invoices, Lendio's software gives you the chance to go paper-free and optimize your cash flow with a variety of payment options. So you don’t have to accept cash payments unless you want to. 9. Give Your Accountant Access When your accountant can quickly access the files and documents for your small business, it makes their job easier. By offering access, they can go in and get the information they need to continue helping your business without pulling you away from what you’re doing. Lendio's software and most other bookkeeping software allow access specifically for your accountant or bookkeeper. They can take care of the tasks you delegate and keep your books in order with a separate password or you can send the documents they need with a couple of clicks. 10. Consider Hiring a Bookkeeper Hiring a good bookkeeping or accounting service is an investment that saves you time and outsources a painstaking task to someone who specializes in it. Most bookkeeping services are relatively affordable and handle everything from accounting to payroll. Right around tax time, you’ll be grateful you decided to hire a bookkeeping service. They’ll save you plenty of money and time spent shuffling through receipts. Overall, having a solid bookkeeping system is important to keeping your business profitable, efficient, and running smoothly. By integrating the small business bookkeeping tips we’ve covered, you don’t have to be stressed out by the tediousness of tracking finances. Instead, you can use bookkeeping software, mileage tracker apps, and invoicing software like Lendio's software to help you stay on top of everything. If all else fails, you could always hire an accountant to help you keep it all together. Disclaimer: This article is not intended as legal or financial advice. Consult your financial and legal professionals for professional advice tailored to your personal circumstances.