Big corporations, may have in-house accountants to help them do their financial calculations. As a tradie, you might not have one.
Being a tradie does not excuse you from having crisp financial records and a clear financial understanding. Instead of investing hours upon hours learning small business accounting, which probably drives you crazy, you can easily outsource your bookkeeping, accounting, and payroll. But that does not excuse you from being on top of your business’s financials.
10 Bookkeeping Tips for Tradies
Here are ten bookkeeping tips for tradies that can help you set the right system, outsource to the right person and assess whether it is being done correctly or not.
1. Use Job Numbers
Job numbers are a way to identify individual tasks or jobs in an organization or business where you handle multiple projects, jobs, or tasks of the same nature. These numbers help distinguish one job from another to avoid miscommunication and confusion. These numbers become even more necessary as the business keeps growing and increasing its clientele base.
Using job numbers improves your bookkeeping by keeping clean records. These records help you track the progress of projects but, most importantly, track which projects are paid and which are yet to be paid. Furthermore, with such trackable projects, it is easier to optimize your execution process.
2. Create a Positive Bookkeeping Process
Most tradies do not enjoy paperwork, hence the career choice away from a desk. Bookkeeping for tradies, therefore, can be a cumbersome task.
To ensure you get it right, create an easy-flowing bookkeeping system. You can easily automate the flow from the job acquisition, execution, submission, invoicing, and payment if you use job numbers. You can also streamline and automate much of your payroll and accounts payable.
You can also outsource your bookkeeping, to receive assistance from a professional and set up everything as it should be.
3. Outsource Your Invoicing and Accounts Payable & Receivable
Managing all accounts can take a lot of time if done manually. Investing in an outsourced solution not only ensures you follow best practices but guarantees you stop sinking hours of your time into a standardised process. Instead, you could be off finding new clients to grow your business.
4. Stay on Top of Your Tax Obligations
Every business has to pay taxes. Filling in tax forms requires you to go back to your business finances to make the correct reporting. Failing to report correctly when filling in tax forms can be a crime. Therefore you should stay on top of your tax obligations.
Nevertheless, you can work with a tax accountant who can help you get your records in check when reporting. In addition, a tax accountant will help you claim tax deductions that your business can be eligible for.
5. Don’t Mix Personal and Business Expenses
One of the critical character traits that successful tradies have to have is discipline. Not only discipline at work but also financial discipline. To avoid the temptation of using business finances to offset personal expenditure, it is a best practice to keep the two separate. Have a different bank account for your business and a different account for your personal expenses. The demarcation helps uphold the financial discipline required.
6. Monitor Your Bank Account
Making money is difficult. Spending it, on the other hand, is intuitive. You might think you have money in the bank and set off on a spending spree. That will harm or even kill your business. Instead, you need to be at the top of every dollar that enters and leaves your bank account.
7. Keep In Contact With Your Customers
When you serve a customer, that should not be the end of your interaction. It is cheaper to service a previously acquired customer than to go out and acquire a new one. Therefore, it is crucial that you have your customers’ contact details so that you can keep nurturing that relationship to generate repeat business.
You might also need their contact details to reach out for feedback and recommendations. Also, if you will be rolling out new products or services, it is easier to get your customers to try, vet, and even become some of the earlier customers.
8. Maintain Detailed Financial Reports and Statements
The lifeline of your business depends on these reports and statements. Different financial reports and statements tell you different things. Having the details will ensure that the insight you derive from either of them is reliable.
The four financial reports and statements you need to keep accurate to the decimal – literally – are a balance sheet, an income statement, a cash flow statement, and an annual report.
9. Keep Detailed Receipts
Receipts are proof of purchase or transaction. Keeping your receipts updated and detailed is vital for a business to track expenditure and earnings and as proof documents when tax season comes. Detailed receipts make for accurate reporting.
When you have an automated system, keeping the receipts is easier. But it is also advisable to keep physical copies in case of technological mishaps or corruption.
10. Outsource Your Bookkeeping and Accounts
There are experts that are more than capable of taking your bookkeeping and accounts workload off your plate and helping you manage them remotely. It is a good idea to outsource your bookkeeping if you intend to grow your business and focus on your clients and work. If you are stuck doing administrative work, then your business stalls. Let the professionals handle that and get back to developing your craft.
Bookkeeping for tradies is a crucial part of the business that cannot be ignored or done shabbily. It requires top-notch attention. With the tips provided, you can pay attention to the bookkeeping areas that matter.
But what would give your business more value would be to outsource your bookkeeping tasks. When looking for dependable bookkeeping experts, look no further than Visory. We have an expert team that will work with you to streamline your bookkeeping, accounts payable & receivable, and payroll services. Get started with Visory today.