I have offered bookkeeping services for about 10 years now and there are 3 important things you need to know about data entry when venturing into your new small business. You can get into real trouble if you don’t have your bookkeeping in order. Here we go.
ALWAYS start your business with a good bookkeeping application and process!
Whether it is QuickBooks Pro, QuickBooks Online, Quicken, or any other software or online service, the application needs to be established. Spreadsheets are OK if you absolutely have to use them, initially. But know that you will need to update the system as you get busier. This may happen sooner than you think. Another issue is it can be easily modified accidently or on purpose. The problem is when you try to reconcile your transactions with your bank account, it can get confusing trying to match up the transactions. There is more likelihood of error too. I have experienced clients calling me in a panic because they accidently erased content from their spreadsheet. Why put yourself through undue stress? Get a reliable application that you can establish back up file copies to make sure you can restore the data.
Data Entry Consistency is key to eliminating errors.
There are three parts to this section: 1. enter data regularly, 2. use the same accounts when appropriate, 3. review on a monthly and quarterly basis.
Get help with the data entry when you feel it is getting out of hand. Waiting until the last minute or right before tax time is not the time to get a bookkeeper. It will cost you a pretty penny to do it this way. They will spend a lot of time adding the data and reconcile and there is more likely that there will be more errors because of the rushed job. It’s better to get your data setup each month so the bookkeeper can spend less time per month on the task.
Use the right accounts and change accounts when appropriate. Data entry is not just entering data, it’s also about staying consistent with your entry. For example, if you enter Staples and you use “office supplies” as your standard account since you buy supplies at Staples for your office. When you purchase something else, like a computer, you need to change the account to “office equipment”. Then you go back and purchase something at Staples that would be “office supplies” again, the software may pull up “Office equipment” instead of “Office supplies”. So, you need to be extra careful to use the right account with the right transaction. Being more detailed in your data entry will also keep your reports cleaner with the most accurate data for your small business. If you need help with determining the right accounts, check out how to make your budget effective post for some guidelines.
Review the data monthly and quarterly to double check your work. After entering the data, you may think you are finished. But, you really are not. You need to follow up later with a fresh set of eyes and review the data. This is why reconciling is so important. You can correct any issues you may not have seen when entering the information. Visit Making bookkeeping a priority post to give you more details about making your bookkeeping a habit.
Know when to get help with your data entry.
In the past, I worked with clients that would get so discouraged with their bookkeeping that they would just stop doing it. Then, at the end of the year, they would spend weeks on setting up the paperwork for their accountant and undoubtedly lose something or miss something. I would then come in and help them gather their items. It would take me hours, even days to correct the problems, which would cost a small fortune for one year of work. So, knowing when you need to get help with data entry is key to saving you money and time. Here are some questions to ask yourself to determine if you should outsource your data entry/bookkeeping tasks.
- Do I forget to update the bookkeeping software on a weekly basis?
- Do I forget to reconcile each month?
- Does my accountant have issues at the end of the each year?
- Does my accountant have to spend many hours figuring out what I did?
- Do I spend a large amount of money on having the accountant do the corrections for me?
If you answer “yes” to these questions, you are a good candidate for this service. Feel free to check out my bookkeeping service.
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