Let’s face it – bookkeeping is probably one of the least glamorous parts of running a business. However, staying on top of your business’ finances can really make you feel like a confident and savy business owner. This doesn’t have to be overly complicated or take endless hours of your time.
Here are five (relatively painless) bookkeeping tasks you can perform each month to keep your business running smoothly.
Check your bank account balance.
Your business’ bank account balance is the easiest way to get a quick look at the financial health of your biz. You should set aside time to log into your account, check your balance, transfer any money to/from savings if needed, and read over your transactions.
Scan or save important receipts + paperwork.
Make an effort to hold on to any documentation that might be important for tax time. Scan any paperwork and save it to a cloud-based storage system so you can reduce paper clutter in your workspace. Save important email invoices or receipts as PDFs and save them as well. It’ll be nice and easy to have all your financial records in one place (you’ll thank yourself later)
Summarise your monthly revenue + expenses
If you aren’t using accounting software or a formal system to compile and analyse all your financial transactions, you can still set up a quick method to summarise your monthly sales and expenses. Open a simple spreadsheet or notebook, and just use a calculator to quickly sum your sales for the month. Do the same for your expenses (you can refer to bank account transactions for help with this). The goal is just to become aware of how much you’re really making and spending each month. Keep track of these numbers so you can compare trends and see how you’re doing from month to month.
Calculate your monthly net profit
Take the total sales (or revenue) and expenses you just calculated and just do some simple subtraction. Revenue – expenses = net profit, aka how much you actually made this month. If the number is negative, that’s a net loss. You need this information to grow your business, to set appropriate goals, and to make smart decisions.
Review your financial performance for the month
How’d you do this month financially? How’d you do compared to last month or this time last year? If you had a net loss, why? This is an important step – take your financial, quantitative results and see what helpful info you can gather from them. If you neglect your numbers, you’re missing out on a whole wealth of info that you can use to take your business to the next level.
