Bookkeeping is an important part of business, but it can also be time-consuming. A recent survey by Starling Bank shows that the average small business spends 15 hours a week on financial admin tasks, making up almost a fifth of total work hours. This time that could be put to better use, like coming up with new ideas and growing your business.
That’s not to say you should rush your bookkeeping. Even small mistakes can prove costly, so attention to detail is vital. That said, there are some ways that you can speed up the process. Here are five simple tricks to improve your bookkeeping efficiency without sacrificing accuracy.
1. Stay up to date
The longer you leave bookkeeping tasks, the more difficult they become. Try to balance your books weekly or even daily, rather than leaving it until the end of the month.
Not only does this make the task more manageable, it also reduces the likelihood of missing something important. An incorrect payment or a forgotten invoice can turn into a serious problem if left. Regular bookkeeping means that you can spot these errors and rectify them before any harm is done.
2. Separate your bank accounts
If you’re running a small business and are self-employed, it can be tempting to use your personal bank account for everything. This is a bad idea. Setting up a separate business account may take some effort, but it will save you a lot of time when it comes to bookkeeping.
With a separate account, you won’t have to waste time deciding which transactions are relevant to your business. Opening a business account also makes it easier to complete your tax return. You can calculate your annual profits without the bother of separating business income from personal income.
3. Use automated accounting software
It’s becoming increasingly common for small businesses to use automated accounting software. The government’s Making Tax Digital (MTD) scheme already requires VAT-registered businesses to submit a digital VAT return using a compatible software package. In 2024, this will be extended to income tax for the self-employed and landlords as well.
Investing in accounting software now will give you time to get used to it before the next stage of MTD, but this is not the only benefit. Accounting packages such as Xero can drastically improve the efficiency of your bookkeeping. Xero’s standard package allows you to pay bills, send invoices, and store receipts digitally. This increases accuracy, and cuts out the hassle of manual bookkeeping.
4. Automate your payroll
Most accounting software packages also allow you to automate your payroll. If you have staff this is a huge timesaver, and a great way to maintain morale. An automated payroll system will help ensure that employees are always paid promptly, helping to ease any financial worries they may have.
5. Hire an external bookkeeper
You may decide that you simply don’t have the time to perform bookkeeping tasks yourself. This is no admission of defeat. In fact, hiring an external bookkeeper can be a great business decision.
Employees often get bogged down in bookkeeping at the expense of the jobs they were hired to do. An experienced bookkeeper will be able to complete these tasks in a fraction of the time, allowing you and your team to focus on more pressing matters. An external bookkeeper can also cast a fresh set of eyes over your books, and spot errors that you may have missed.
Further help with bookkeeping
Part of being a good manager is knowing when to ask for help. If you’d like a hand with your bookkeeping, don’t hesitate to get in touch.