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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.
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.
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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. 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.
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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.
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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.
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Informative Bookkeeping Tips!
Thank you!
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!
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!
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.