5 Basics of Money Management your Bookkeeper Wants You to Know

Bookkeeping is something that can make many new small business owners feel anxious. However, you don’t need an accountancy degree to be able to manage your business finances. To help you manage your money better, here are five basics that your bookkeeper wants you to know. 

1. Keep business separate

When it comes to keeping track of your business finances, you need to keep your business funds separate from your personal funds. To do this properly, ensure you open a new bank account that is solely used for your business needs. If you’re doing your bookkeeping yourself, having personal finances in the mix can make things complicated. Besides, if you’re hiring a bookkeeper to manage your books for you, all personal transactions will have to be processed, which takes up valuable time that you’ll be paying for. 

2. Create a tax savings account

When the time comes to pay your tax bill, you ideally should have this money already set aside. Open up a separate savings account and transfer approximately 30-40% of your earnings into this account each month. When your tax bill arrives, you then won’t be short of cash to pay it. 

3. Record every single transaction

When it comes to bookkeeping, every financial transaction matters, regardless of how small. Make sure you keep the receipts for all credit and debit transactions and note them down correctly in your books. 

4. Review expenses daily

There is no better way to keep track of your expenses than immediately after spending. Where this isn’t possible, always be sure to review and input your expenses at the end of each day, and again at the end of each week. Even dedicating just an hour a week to focus on your finances can help to keep them in good shape and your paperwork in order. Leave it too long and you’ll face a messy pile of receipts and notes that will be much harder to organise accurately.

5. Keep categories consistent

When you are allocating expenses to specific categories, such as a parking ticket to “travel”, be sure to keep the categories consistent. This will help you better understand exactly where your money is being spent and whether you need to find a way to keep this expense down. If one expense is being spread over multiple categories, it can be hard to see the true impact it is having on your business. 

HiThrive offer a professional, friendly and personal bookkeeping and payroll service. We work with you to ensure that your books are always up to date, and important deadlines are always met. Let's arrange a chat to discuss how we can best support you and your business.