Tips For Excellent Bookkeeping

0

As a small business owner, it is imperative that you keep great books. More than likely, you are handling your own finances and if you are not you are delegating that work to a third party. Having great books helps you in the long run because when tax time comes around, you have all the necessary information to prove your write-offs in the event you are audited. Keeping your books organized can also help the business stay more organized. If you are searching for ways that will keep your bookkeeping up to date and organized, here are some of our tips.

Business And Personal Bank Accounts

Make sure that you have a separate bank account for your business. Keeping everything under one account can seem tempting. It may seem easier now, but it may cost you in the long run. You want to keep personal funds separate from your business funds. You could accidentally spend money that was meant for the business. Your outsourced bookkeeper will thank you if you have a separate account because they can spend less time figuring out which is a personal expense and which is a business expense, and spend more time tracking your payments.

Know What Is A Personal Expense And What Is A Business Expense

If you are the sole proprietor of a business that you own, you may commonly take money out of your business account and put that money into their personal account as a way to “pay yourself.” This is fine as long as you check with your accountant to see if this is ok. There may be a better way to do this that will not confuse the books. If you insist on this method of paying yourself, make sure that you are transferring one specific amount on a consistent basis.

Use The Right Bookkeeping Software

Picking the wrong bookkeeping software is setting your books up for failure. There are plenty to choose from, but you want to make sure that you are picking the best one for you and your business. It all depends on what your specific needs are. Not all businesses keep track of the same things. Many software comes with the essentials like a cashbook, a ledger, inventory, foreign currency transactions and a point of sale.

Keep Your Business Documents Organized

Keeping your business documents organized is crucial for excellent bookkeeping. It will be easy to track stuff for any potential questions that may come up in the future as well as serve as proof in the event you are audited. As a rule of thumb, it is best to keep track of all tax documents for anywhere between five to seven years. These are things like invoices, receipts, wage records and other things that show how you run your business. If you do not have proof of these things when an auditor comes, you might as well hire a Boulder Legal Group attorney.

Track Cash Payments

Cash payments may be a thing of the past, but when you do receive them make sure that you are keeping track of them. Deposit the cash into the business bank account before you spend any of it. The same thing goes for petty cash. Failure to do this will show that you are not keeping an accurate record of what is going on in your business.

(Cover Image Source: Pexels)

Share.

About Author

Larry is the father of 5 wonderful kids. He has his normal "offline" job but has also been running an online business for over 15 years. When he is not working on websites or blogging, he enjoys video gaming and watching sports.

Leave A Reply