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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.
The top 10 bookkeeping tips will assist your business in achieving accurate financial records. Accurate financial records lead to up-to-date reports, cash flow, profit, and growth.
Before we get started let me remind you to sign up for my free Bookkeeping Simplified Guide. My Bookkeeping Simplified Guide includes free access to my method on how to put your bookkeeping on a schedule.
1. Choose a Bookkeeping Software
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 inexpensive software like FreshBooks and Wave. Determine which program is right for you.
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 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.
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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. But remember if you scan and save receipts, be sure to back up all your work files.
4. Find a CPA or Tax Adviser
It is important that you have someone review your books quarterly or semi-annually. 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 income tax season. The CPA or tax adviser will be familiar with your business and your books. Review and editing ensures a quick and painless income tax filing.
5. Federal, State, and Additional Tax Money
Another bookkeeping tip is to work with your CPA or tax adviser in budgeting money that will be paid to federal and state taxes. There are those businesses that need to pay a regular gross receipt tax or service fee. It is good practice to separate funds due.
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, do not forget to add this percentage into your sales prices. 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 adjust the business spending habits as needed.
7. Reconcile Accounts Monthly
Always make sure your recorded transactions agree with your bank accounts or other sources of income. By reconciling your accounts monthly you can catch errors.
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
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, conclude whether bills need to be paid immediately or if they have a longer payment period. Every so often customers need a push to pay their late payments for goods or services.
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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 related. Business credit cards and loans should be separated from your personal accounts too.
Keep track of expenses so you do not lose out on tax deductions.
10. Simplify Payroll
Bookkeepers can run payroll and process taxes that are associated with payroll. However, I have learned that it is not always necessary to place so much work on yourself.
My final bookkeeping tip is to outsource your payroll to a professional payroll company. I use Paychex because they specialize in payroll and they handle all our payroll documents and payments.
Informative Bookkeeping Tips!
Very informative article. Thank you for sharing this great information. I hope it will be really helpful for all the readers on your website.
Thank you! I hope it is helpful to my readers too.
This is a great article! Thank you for sharing this information. I will be looking to implement a few of your tips in the near future. 😉💄
Thank you so much for these bookkeeping tips
Thank you for visiting my site!
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.
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!
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.
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.
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.
I am partial to QuickBooks, but you need to find an accounting software that works for you and your business. Good luck to you!
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.
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!
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.
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.
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
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.
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/
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!
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!
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.