Top 10 Bookkeeping Tips

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Bookkeeping tips can be too simple for some or overwhelming for others.  I have listed 10 tips that are pertinent information when starting a new business.  Implementing a routine with the tips below will simplify your bookkeeping duties.  The top 10 bookkeeping tips will also assist your business in succeeding to achieve good financial records and management review.  Businesses benefit from financial health and it is crucial to cash flow and profits.

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Bookkeeping tips assist businesses. Scheduled routines and simplified duties allow a company to smoothly complete bookkeeping responsibilities.

1.  Choose a Bookkeeping Software

I’ve stated this many time in my blog posts but, one of the most important bookkeeping tips is to incorporate a bookkeeping method to track income and expenses.  I use QuickBooks and have used QuickBooks for many years.  However, there are various cloud-based versions of software inexpensive like FreshBooks and Wave.  Determine which program is right for you.  FreshBooks is cloud accounting and offers a 30-day free trial.

2.  Keep the Chart of Accounts Simple

A chart of accounts is a list of expenses, bank accounts, liabilities, and more.  When you are starting a business make your chart of accounts simple because it is easy to complicate things.  Expenses are items like office supplies.  You can group any item purchased for the office like ink, paper, etc. into office supplies.  Some software like QuickBooks will incorporate a small list of expenses in the chart of accounts to help you get started.    

3.  Choose a File System for Vendors

Use a filing system for your vendors.  I have worked with both a file folder system and a paperless system.  If you use files for your business receipts simplify what you can.  For instance, if you keep track of meals purchased for your business name a file something simple like Meals or Restaurants.  If you scan and save receipts, back up all files. 

4.  Find a CPA or Tax Adviser

It is important that you have someone review your books quarterly or semiannually.  An adviser can answer questions about your bookkeeping and help correct any mistakes.  A CPA or tax adviser can assist with any changes that need to be made before end-of-year taxes.  The CPA or tax adviser will be familiar with your business and your books.  Review and editing ensures a quick and painless end-of-year tax filing.

5.  Federal, State, and Additional Tax Money

Another bookkeeping tip is to work with your CPA or tax adviser in budgeting aside money that will be paid to federal and state taxes.  For those businesses that need to pay a regular gross receipt tax or service fee be certain to separate these funds, so you pay them on time.  Your adviser will assist you in estimated federal taxes and other areas you may need help in.  If your state requires a gross receipt tax or an additional fee be certain to add this percentage into your prices or charge enough to deduct the amount from your sales amount.  Remember, you want to make a profit.

6.  Budget and Manage Expenses

Use your bookkeeping to manage expenses and future needs.  A budget will help find out where monies are being spent.  In addition, future expenses can be budgeted in so that money is set aside.  A budget also encourages you to make cut backs where you discover you are spending more money than needed.  A business usually has typical expenses like a water service or uniform service, so it’s looking into cutting back on expenses your business doesn’t need.

7.  Reconcile Accounts Monthly

Always confirm that you have your recorded transactions in agreement with your bank accounts or other sources of income.  By reconciling your accounts monthly you can catch errors.  Therefore, adjustments can be made to rectify any errors.  Reconciliations confirm that your books are in a good state.  Banks and other income sources usually send out statements once a month, so this is a good time to conduct your reconciliations. 

8.  Schedule Accounts Payable and Accounts Receivable

Whether you are working alone or with employees, there should be a designated time weekly bi-monthly or monthly to pay bills and review late paying customers.  Accounts payable and accounts receivable go hand in hand.  You need to receive money to pay out money.  Even if you are small and just starting out, conclude whether bills need to be paid immediately or if they have a longer payment period.  Customers sometimes need a push to pay their late payments on goods or services. 

9.  Keep Personal Finances Separate from Business Finances

When you start a business, open a separate bank account.  Deciphering what is business and what is personal becomes more difficult when you are using one account for both.  By using only your business account for business ensures that your deductions are business expenses.  Don’t forget that business credit cards and loans should also be separated from your personal accounts.  You can lose out on tax deductions if you end up using personal accounts and forget to claim them in as the business. 

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10.  Simplify Payroll

Bookkeepers can run payroll and process taxes that are associated with the payroll.  However, I have learned that it is not always necessary to place so much work on yourself that is why I’ve included this final bookkeeping tip. I use Paychex for payroll.  They specialize in payroll and they handle all documents and payments.  If you only have one person overseeing payroll, you might outsource it to a professional company.

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Top 10 Bookkeeping Tips

18 Comments

  1. Thank you so much for these bookkeeping tips

    1. Thank you for visiting my site!

  2. Thanks for explaining that books should be reviewed at least semiannually. My brother is thinking of starting up a business this year. He’ll have to look into tax and accounting services.

    1. Bookkeeping should be completed regularly and reconciled monthly. However, you should keep in touch with your CPA or tax adviser to review your books semiannually or more often dependent upon the growth and changes of the company. I wish your brother luck in his new business!

      1. I agree Christa. Good advice. Reconciling bank and credit card accounts regularly is a big step to keeping good accounting records. As CAs (CPA equivalent) ourselves, this saves heaps of time when we prepare monthly financial reports and tax returns, etc. We recommend Xero accounting software, which is becoming very popular.

        1. Working with tax advisers and CPA’s I have learned some tips to make it easier on both ends. I have been certified in Xero, but I work with and prefer QuickBooks. There are many valuable accounting software programs to use.

  3. Yes, I totally agree with what you said. I think that it is very effective for easy accounting work when we have a good Bookkeeping Software. I think that work will be faster and easier. Thanks for sharing this article.

    1. I am partial to QuickBooks, but you need to find an accounting software that works for you and your business. Good luck to you!

  4. I really appreciated the tip that you gave to consider hiring an adviser to help you with your bookkeeping. I think that this would be so helpful in our situation. We are looking to get financial help, so we could more strategically manage our expenses, and it will be important for us to know that we could do so properly. I will be sure to talk to my colleagues about hiring a professional bookkeeper, so that we can come to a unanimous decision about it.

    1. Hi Jack! I’m glad you read my post and were able to take away beneficial information for you and your company. Having a bookkeeper and a CPA or tax adviser available to your company can only help your business. There are so many benefits to hiring a professional bookkeeper as I’ve noted in one of my many posts http://www.navigatewithprice.com/5-reasons-why-you-should-outsource-bookkeeping/. Good luck to you and your colleagues!

  5. I agree with your tips Christa. Bookkeeping might seem a tedious chore at first for many small-business owners. But it doesn’t have to be. If they hire a good virtual accountant instead, they’ll have more time to focus on the areas of their business they enjoy the most.

    A virtual accountant will be worth their weight in gold as they relieve the mundane task of processing and recording your bank and credit card transactions.

    As your article mentions, payroll and bookkeeping software help enormously.

    1. Thank you for the comment Mark! As a business owner I know that bookkeeping takes up time during the week that can be spent elsewhere. I also understand how important it is to keep the books up to date for purchasing and budget. Small business owners can hire someone to take the burden off of their hands and continue to focus on managing.

  6. I can see how a business can really benefit from hiring a bookkeeper. It could be really nice for them to be sure that they are working with a professional that can help them. It was interesting to learn about how there should be time bi-weekly or monthly to pay bills and review late-paying customers. http://www.ledgersonline.com/bookkeeping-services-victoria

    1. Thank you for the feedback Jenna! Unfortunately, late-paying customers happen. Reviewing your accounts receivable is important. Receiving money regularly from clients or customers helps with cash flow and accounts payable.

  7. Worth reading tips! Each point of bookkeeping really helps to think and analyze to choose the service. You have mentioned that how we can do bookkeeping to manage expenses and future needs for small businesses. https://www.mindspaceoutsourcing.com/

    1. There are a large number of small businesses in the U.S. However, they fail because of minimum wage hikes, material expenses, gross receipt taxes, and more. The idea is to help small businesses get started off on the right foot. I appreciate the comment!

  8. Good advice!
    I think utilising a good bookkeeping software is something that is often overlooked in small businesses. This is something that can be handy to both the business owner and their bookkeeper.
    Keep up withe the great content! Looking forward to reading more!

    1. Hi Sara – Thank you for the nice comment! Bookkeeping software is important for business. It streamlines the process and allows for more time in other areas of the business.

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