Bookkeeping for small businesses: 6 basic tips that help

Bookkeeping! Do you get dizzy just thinking about endless numeric tables? Or do you simply lack the time to deal with the numbers in detail? Understandable. But as the owner of a small business, you either have to assign the task to somebody else or you will have to do it yourself. But this suffering is over, thanks to some simplified rules and the following “basic settings. Self-employed people or freelancers can now reduce their accounting effort even more.

So before you dive into the details, you should make a few basic simplifications in advance. Things that will make it easier for you to handle your finances. And also give you valuable insights into the financial state of your business.

Tip 1: Set up a business account

At the beginning of building a small business, it seems unnecessary to separate private and business finances. But this can change quickly and your finances can become very confusing. Which booking is business and which is private? And at some point, you might lose track of how liquid your company is. Whether or not you have sufficient reserves for tax prepayments and the VAT. In the case of a tax audit, you may not want to present all your private cash flows. Ultimately, only a business account will help your company to achieve creditworthiness. Furthermore, many banks exclude the use of current accounts for business purposes and termination may happen.

Tip 2: Store receipts securely

Companies have much stricter retention obligations than private individuals are used to. Not only in terms of tax law. Every receipt and account statement, all invoices, mandatory books and financial statements must be stored securely and ready to hand at any time for ten years. Also delivery bills, all customer correspondence, and other documents have to be stored over six years. To do this, you store the documents for each fiscal year in a neatly sorted, dated, and numbered manner, either in analog form in file folders or in modern digital form

Tip 3: Categorize Files

For everyday use, it has proven to be a good idea to organize all accounting documents in six categories chronologically and logically:

• Invoice receipts from suppliers, service providers, or other operational purchases and expenditures
• Outgoing invoices to your customers
• Statements of the business account
• Cash desk for cash flows, kept as a book with sorted receipts
• Evaluations from accounting plus advance VAT returns: Both are particularly informative for your overall overview
• Credit card statements, only if you also pay by credit card

Tip 4: Get a regular overview

Check your accounting with all the documents weekly or once a month, but at least at the end of each quarter. In this way, you can keep track of outstanding receipts, overdue invoices, expiring deadlines, etc. More importantly, you get used to looking at the development of business finances, develop a forward-looking perspective, recognize emerging trends, or imbalances. The financial overview is the basis for further planning such as investments or hiring of employees.

Tip 5: Keep an eye on the taxes

Make sure that deadlines are met for notifications, advance payments, and declarations. If you already know about an upcoming tax payment, you should set aside money and consider it as unavailable.

Tip 6: Digitalization and automation

Take advantage of the fastest options wherever you can. Online banking, installed or cloud-based software for

• Invoices,
• Accounting,
• Storage,
• Synchronizations and
• Export and even more,

such as GetMyInvoices, which are immensely time and cost-saving. Especially German data storage devices are much more secure than file folders or hard disks.

Save yourself the manual completion of spreadsheets and forms. Whether installed on the hard drive or as SaaS (Software as a Service) in the cloud: modern accounting software can do a lot for you. Scan in paper documents and you’re done. The rest is done with powerful yet easy tools. And your tax accountant’s office receives all receipts digitally via a data interface.

Accounting is really a piece of cake for you as a small business owner if you can find exactly the support that fits your needs. After all, you have enough to do with your actual tasks.