Top Tips to Keep Your Bookkeeping in Tip Top Shape—Series #1
No matter the size of your business, it is unimaginable how it would properly function without a solid bookkeeping system in place. It serves a great purpose for tax preparation, which most of you just spent the last 6-8 weeks confirming. Also gives a concrete indication of your company’s success and sustainability. But to maintain your books, keeping them accurate, timely and reliable is one of the biggest challenges. After all, you got in to business to sell a product or provide a service, not to do bookkeeping. Let’s get it shape and keep it that way.
1. Keep your bookkeeping and records organized. One of the most important bookkeeping tips for small businesses is to stay organized during the entire year so you are not scrambling come tax time.
Gather up and organize receipts and other required documentation, such as mileage logs.
Gather documentation for large depreciative items, such as furniture and equipment purchases.
Verify you have accurate information for all 1099 recipients.
Reconcile your checking, credit card, loans, etc., each month. Balance your account 2-3 times per month to be better prepared to reconcile when the statement is available.
2. Keep Your Personal Finances Separate. You should keep your personal finances entirely separate from your business finances.
Don’t use your business accounts as an ATM. Avoid frustration and mis-categorization, set-up a separate bank account for your company.
Pay yourself SOMETHING each week, even the smallest amount and make it a habit, a good habit. Justifying running personal expenses through your business checking or credit card can get out of hand very quickly and that is a rabbit hole you don’t want to go down.
3. Keep it in the Cloud!
Cloud Accounting and bookkeeping software bring real time reporting to small business owners. QuickBooks is an amazing product, with many certified apps and integrations to meet your business financial needs. This budget-friendly software, automates much of the bookkeeping function, however, does not replace the need for an expert’s guidance. Garbage in = Garbage out = Waste Time = Loss of Profit
Dropbox is another great product for online storage. They have a free option that will work for many people with minimal storage needs. As your business grows, there are very affordable options to keep your documents safe and accessible.
As we go through life, we change what we do to stay in shape, get in shape or reshape our lives in many ways. Workout routines, diets, habits, relationships, and on and on. Your bookkeeping process is similar. As your business grows, your bookkeeping needs change and need to be in the shape it takes to support those needs and changes. If you follow my series, you will soon be in tip top shape, ready for changes and growth. You will be ready for a tax planning session in the 4th quarter, making you even more prepared for tax time when it rolls around again. See you next month!