Some of my blog posts include affiliate links. If you purchase an item from one of my links I may receive a commission. Please read my disclaimer for more details.
Bookkeeping tasks can be too simple for some and overwhelming for others. These 10 simple bookkeeping tips will help you smoothly complete your bookkeeping responsibilities and build your business.
Accurate financial records give you up-to-date reports, informed management decisions, and business growth.
1. Choose a Bookkeeping Software
One of the most notable bookkeeping tips is using accounting software for your business bookkeeping. Proper software helps to track income and expenses.
I use QuickBooks and have used QuickBooks for many years. However, there are a variety of cloud-based accounting software you can use. Determine which program is right for you!
Before we get too far into this article, I want to remind you to sign up for my free Bookkeeping Simplified Guide.
2. Keep the Chart of Accounts Simple
A chart of accounts is a category list. The chart of accounts includes assets, liabilities, equity, revenue, and expenses. When you start a business, don’t complicate your chart of accounts.
Expenses are items like office supplies. Group items purchased like ink and paper into office supplies. Software like QuickBooks will incorporate a small list of expenses in the chart of accounts to help you get started.
However, a qualified bookkeeper or accountant can help you organize it specifically for your business.
- What Does a Bookkeeper Do?
- 5 Ways to Know You’re Ready to Hire a Virtual Bookkeeper
- 5 Reasons You Need to Outsource Bookkeeping
- 3 Reasons Why You Need a Bookkeeper All Year
- 3 Necessary Actions for New Small Business Bookkeeping
- How to Stay Motivated While You Build Your Business
- What Does Work-Life Balance Mean to You?
- 11 Simple Strategies to Increase Your Small Business Profits
- 10 Benefits of Bookkeeping in Business
- How to Protect Your Online Business Using Legal Templates
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. Keeping track of receipts does not have to be a chore.
Make sure and find the best process for you and your business. The business owners who scan receipts need to back up all work files.
4. Find a CPA or Tax Adviser
It is valuable to have someone review your books quarterly or semi-annually.
Working with a CPA or tax adviser allows you to have someone know your business and your books.
An adviser can answer questions about your bookkeeping and help correct any mistakes. Review and correct any bookkeeping errors before the end of the year. We all know how quickly a year goes by!
5. Federal, State, and Additional Tax Money
Another bookkeeping tip is to budget money that goes to federal and state taxes. Some businesses will pay sales tax or gross receipt tax. It is good practice to separate funds due for taxes.
Your adviser will assist you in estimating federal taxes and other tax areas. If your state requires a gross receipt tax, do not forget to add this percentage to your sales prices.
A software accounting program like QuickBooks will help you addon taxes to customer invoices.
6. Budget and Manage Expenses
Use your bookkeeping to manage expenses and future needs. A budget will help manage where financial profits get spent within your company.
A budget also encourages you to adjust your business spending habits as needed. Include business tools, assets, inventory, and other supplies into your budget.
- Important End of Year Checklist for Small Business
- Common Tax Deductions for Small Business Owners
- The Most Common Self-Employment Tax Deductions
- Why Do Small Businesses Need to Understand W9 Forms?
- How to Prepare Your Small Business for Tax Season
- Helpful Tips to Prepare for Income Tax Season
7. Reconcile Accounts Monthly
Always reconcile recorded transactions with your bank, credit card, and merchant statements. By reconciling your accounts, you can catch bookkeeping errors.
Make corrections to any errors found to have up-to-date bookkeeping records.
Banks and other income sources send statements once a month; therefore, this is a perfect time to conduct your reconciliations.
8. Schedule Accounts Payable and Accounts Receivable
Designate a 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, keep up with bills and when they are due for payment.
Late-paying customers need a push to pay late payments for goods or services.
9. Keep Personal Finances Separate from Business Finances
When you start a business, open a separate bank account. Deciphering which costs are business related and which costs are personal becomes difficult when you use one account for both business and personal.
Using only your business account for business ensures that your deductions are business related.
Keep track of expenses so you do not lose out on qualified tax deductions.
- 9 Steps to Make Before Starting a Small Business
- How to Work from Home and Make Money
- Semi-Annual Bookkeeping Tips are Important
- The Best Business Ideas for Women Entrepreneurs
- How to Make an Extra $1000 a Month
- 13 Best Easy to Start Online Business Ideas
- How to Make Drop Shipping Work for Your E-Commerce Store
- How to Become a Freelancer with No Experience
10. Simplify Payroll
Bookkeepers can run payroll and process taxes that are associated with payroll. I have learned that it is okay to use third-party companies. You do not always need to complete all the work yourself.
My final bookkeeping tip is to outsource your business payroll to a professional payroll company.
I use Paychex because they specialize in payroll and offer many services.
Like this post? Please share!