We all know that keeping up with our business books is a necessity, even though at times it may seem to be a daunting task. There are so many areas of running a business that depend on proper financial record keeping, which makes this a most important task.
Below are 5 tips to help you get your bookkeeping organized.
Business bank account ~ If you have a business, you should have a business bank account. All money in and out of your business should be generated within this account. Keep your personal accounts separate from your business accounts. If you do run a business transaction through your personal account, it can be properly recorded to your business. But it is so much easier to simply keep the accounts separate.
Recordkeeping systems ~ Develop a recordkeeping process for your business. Have a system for keeping up with your income and expenses. Set this system up with the end of year tax preparation in mind. Have documented proof of all your transactions. Also create a system for maintaining client and vendor records. This will help you know who owes you money and who you owe money. And finally, create a system for keeping up with your products, services and inventory if applicable to your business.
Review and reconcile ~ Review your bank transactions weekly if possible, and reconcile your account at least once per month. Letting this task lag behind can cause extra work and headaches if you have transactions you need to “figure out”. You are far more likely to quickly remember a transaction within the past couple of weeks versus a couple of months. Take a look at the cash flow and profit and loss for your business at least once a month. Plan to compare current year reports to prior year reports quarterly. Not only will this help you stay on top of the financial health of your business, but will also allow you to spot any discrepancies or mistakes in your recordkeeping.
Schedule ~ Develop a schedule for consistent review of your business finances. Set reminders and add the tasks to your calendar. Having a regular schedule in place will keep everything on track and ensure you do not miss important deadlines. This will help you not only stay organized, but will help you avoid incurring unnecessary penalties and fees.
Software ~ Consider utilizing accounting software which will make everything easier to organize and properly document. You can set up and manage your expense accounts, sales tax, list for customers, vendors, products and services. You can also track inventory. You can create customer workflows including sending estimates, invoices and accepting payments. You can create vendor workflows as well, including receipt tracking, bill paying and managing purchase orders. Having everything in one place will be a big plus as well. It will take a little time on the front end to properly set up, but the pay off will be time saved in your day to day and month to month bookkeeping processes.
Whichever method you use to keep track of your business books, the main idea to staying organized is creating and following a consistent process. Not only will you stay in the know by regularly checking on the pulse of your business, but you will be delighted with the results of your work when tax time rolls around!