30 Jul 7 Basic Bookkeeping Tips For A Successful Small Business
Accurate bookkeeping is a very important aspect of your accounting process. In everyday business, you borrow money, receive income, acquire assets, and many other financial transactions. Keeping record of those transactions accurately is key in your business’ success.
Keeping accurate and organized records will help you record credits and debits, as well as eliminate room for surprise. This is also key when it comes to cash flow management as well as projections for growth and other estimations.
Just getting started? These 7 Tips will make it easier to keep your books organized and your company financially healthy.
1. Keep registers of cash, expenses and income.
Simply creating categories to track income and expenses will go a long way. Some examples of those categories include rent, utilities, office supplies, income, etc. An easy way to do this is with QuickBooks. There are also other programs to assist with this. Make sure to consider your need for remote access and storage when choosing a platform.
2. Keep organized records
With technology, it is now possible to store records electronically, however manual storage is still a viable option. This will come in handy when determining when a vendor bill was paid or received as well as when customer invoices were generated and/or paid.
3. Create a cut-off date to have your accounts balanced
The most commonly used time frame is monthly. This will be the cut-off date to have all income and expenses reported and recorded. At this point you will check for un-cleared transactions. If something hasn’t cleared the bank within 30 days, it probably requires some extra investigation. Also be on the lookout for anything unusual when checking your bank statement. Any red flags should be researched to prevent fraud.
4. Keep receipts
Any receipts you plan to use as a tax deduction should be stored (either electronically or manually.) Those small amounts will add up over the year, and you want to have the documentation to prove the expense if need be.
5. Log all petty cash transactions
As mentioned previously, maintaining receipts for petty cash transactions is very important. Reconcile the account on a regular basis to ensure you’re claiming all necessary expenses. Most companies allot an amount each month to their petty cash account to pay for incidentals.
6. Reimburse business expenses
Make sure to have receipts for business expenses, so you are able to distinguish between personal and business expenses.
7. File all necessary tax forms.
There are many different variables when it comes to necessary tax forms. Ensure you’re filing all necessary forms for your current situation. The first step will be the SS-4, which is for obtaining a Federal Identification Number. Without this number, you will not be able to file tax forms. Most forms are available on the IRS website. Payroll forms I-9 and W-4 are both required when hiring employees. If you have contract employees, a 1099-MISC may be required.
This can all be overwhelming, but if you keep clean, organized records, you’re well on your way to a financially successful business! Having an employee or outside bookkeeper handle this for you will protect you from costly mistakes down the road.