From having one sale as a business owner down to many other sales that will follow suit, it is crucial that you keep a record.
It is expected that a business that is just starting out might have few records to keep. That does not mean you can boycott proper accounting as a business owner. I know you are excited that you are making sales which is all you are after.
But how do you measure your performance at the end of the day when there is no record of sales, expenses, or inventory? That is just one of the many disadvantages of not having a bookkeeping system for your business.
The absence of a record system can make you lose track of some of your daily transactions like debts, credits, etc which can be a bad item for your business.
“Never take your eyes off the cash flow because it’s the lifeblood of business.” – Sir. Richard Branson
To help you do that without having to stress, I’m bringing you some tips that can make recording your business daily transaction seemingly easy to do.
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What does bookkeeping mean for business owners?
Bookkeeping is the system where a business keeps a record of every transaction carried out in the business on a daily basis.
Bookkeeping though a popular accounting and business term has different complexities which are based on the size of the business. It could be very simple for small business owners and mostly does not require any expertise in accounting.
The story can be different for big businesses where professional accounting might be required. But one thing to note is that both small and big businesses keep records of every transaction.
There is no transaction that is too small to be recorded in your bookkeeping system. So far it is made within the business’ jurisdictions.
Simple Tips You Need To Know About Recording Sales And Expenses
1. Detailed and separate record books
Having a separate book for your sales and expenses will save you from having transaction mix-ups. When an accounting book is clogged with too many entries, you might lose track of some transactions.
To avoid simple issues such as difficulty in tracing certain transactions which can compound at the end of the financial period. You can take the chance to have separate books of different entries.
That is one of the benefits of using a digital bookkeeping system, you get to enter your sales, expenses, and inventory using separate channels. A bookkeeping app like Kashbuk provides you with this function. Kashbuk allows you to access your transaction details based on their entry class.
2. Cash flow management
The only way to know how and where your business cash flow is going is by looking through your record books. Nobody can keep records in their head and present them in full when needed.
Using a bookkeeping system is the way to trace and manage business money flow. You know how much income you are getting and how much spending you have. This way you can determine where to cut down and what to step up.
And the way to understand your cash flow is possible when you keep separate bookkeeping records for every entry class. Your sales record, inventory, expenses, debts, and credits, should have different record books.
3. Don’t mix business with pleasure
This a well-known phrase that is never out of fashion for business. Never allow your personal dealings to eat into your business. Business is strictly business and the goal is to make a profit. Hence, the reason why it is top-notch advice to keep personal spending out of your business.
Part of the secrets of successful businesses today is that they were able to stick to this rule. If you are not careful as a business owner, you might eat deep into your gains and this is plausible especially when there is no proper bookkeeping.
Also, there is an accounting rule that says a business is separate from the owner’s personal life. That is the separate entity accounting. It’s your business but if you really want to see it grow big, you need to keep this rule.
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4. Regular account audit
It is key that you examine your transaction records on a daily, weekly, or monthly basis.
Regular audit of your records has one top benefit which helps your business to grow and improve. That benefit is that it helps you discover missing transactions, fraud, or unauthorized activities, and keeps you informed about the business’s financial state.
And this is needed especially if you are looking to expand. Sometimes, auditing might require that you involve experts. But for most small business owners, it is something you can get done on your own with little or no supervision. When you audit, you get the chance to discover loopholes in your cash flow. This way you can create appropriate measures to seal those loopholes.
How To Record Daily Sales And Expenses
At the very beginning of planning or starting your business, you need to decide on a bookkeeping system that best suits your business. There are two types in the modern business world; digital bookkeeping and traditional bookkeeping.
With the digital bookkeeping system, you need to engage the use of a software program like Kashbuk that offers you both a mobile and web app version for easy administrative use.
The traditional system, on the other hand, requires that you record your sales, expenses, and other business records in a book manually.
The best way is to keep a separate part of your book for each entry class. Sales book, Expenses book, Inventory, Debits & Credits, and so on. This is to create convenience for you especially when you might need to trace certain transactions at a time.
