How to Do Bookkeeping for a Small Business
If you own a restaurant or any type of business, you will have to perform bookkeeping to track all your income and expenses. A well-designed bookkeeping program can ensure that your bills are paid, you receive money for your invoices, and you have money set aside for your taxes. Not sure how to do bookkeeping for a small business?
This article will serve as a short overview of bookkeeping for a small business. We’ll review what bookkeeping is, how to get started, and whether you should consider outsourcing your bookkeeping services.
Bookkeeping Basics for Small Businesses
In a nutshell, bookkeeping is the process of tracking and managing a business’s financial transactions. A bookkeeper will create a ledger or “set of books” for this purpose. Back in the day, these books were physical objects where transactions were written down. These days, almost all bookkeepers use dedicated software to make the process faster and more efficient.
A bookkeeper performs a number of important tasks for a business, usually including:
- Tracking all bills and receipts
- Paying invoices
- Sending invoices
- Handling payroll
The Difference Between Accounting and Bookkeeping
Many people assume that bookkeeping and accounting are the same thing. In fact, though they overlap in some areas, bookkeeping and accounting are two separate specialties. Bookkeepers are administrators, managing the day-to-day financial transactions of a business.
An accountant takes a broader view of a company’s finances. They are more likely to generate profit and loss reports, prepare a business’s tax returns, and provide strategic financial advice. For example, an accountant may recommend how to cut costs or create departmental budgets.
How to Start Bookkeeping for a Small Business
Many small business owners start out by doing their own bookkeeping. If you are organized, self-motivated, and have taken accounting classes, you may be able to serve as your own bookkeeper. Even if you haven’t taken accounting classes in school, you can find many free or low-cost videos, books, and programs on bookkeeping basics for small businesses.
Step one is to invest in bookkeeping software.
You can find many great software reviews online. Look for software that meets your budget and the needs of your business.
Next, set up your books.
It can take time to determine different expense categories, input your vendors, and link your accounts, but this is worth doing right. In fact, you may even wish to hire a bookkeeper to set up your books and give you a quick how-to course on how to manage them before taking over the process yourself.
Step three, start bookkeeping.
You’ll want to carve out time on a regular basis to input all your business transactions into your software. Some business owners do this daily while others choose to perform their bookkeeping weekly. Some business owners even wait until the beginning or end of each month to do their bookkeeping, though this isn’t considered best practices.
Your bookkeeping software may also include invoicing, payroll, and reporting capabilities. Depending on your comfort level, you may want to utilize these features and handle more financial aspects of your business.
Should You Outsource Your Bookkeeping?
As your business grows, your time often becomes more limited. Additionally, you may find that your bookkeeping grows in complexity as you bring on more employees, work with more vendors, and open additional locations.
If you want to focus on higher-level tasks, it might be time to outsource your bookkeeping. You can do this in several ways. First, you can hire a dedicated full-time or part-time bookkeeper for your business. If you’d rather not bring on a new employee, you can hire a freelance bookkeeper or work with an online bookkeeping firm. Most bookkeepers will charge a set monthly rate based on how much work they perform for your company.
RASI offers bookkeeping services specifically for the hospitality market. We can take over your bookkeeping, payroll, accounting needs, and more. If you want to spend more time leading your company and less time managing your books, consider our comprehensive restaurant bookkeeping services!