Bookkeeping has many detailed steps. If you are not a detailed person, this may be a struggle to handle. I have many clients that when they started their business didn’t know how to manage all the details in bookkeeping. And, by the time I started working with them, we had to create systems on not only how to keep the books, but also the system of how to keep the paperwork so that I could get it into the books. This week we are going to talk about the five essential bookkeeping tips for a small business.
Below are the Five Bookkeeping Tips for small businesses and solopreneurs.
Keep your personal charges out of your business account. Think of your business as a separate entity. You should minimize the number of personal charges in the account. If you do have to use your business for personal use, be sure to clearly use a “Personal” account name and write in the memo section what it was exactly for. This way your accountant will know the reason for the personal charge.
Use an accordion folder to organize your receipts. Create categories like office supplies, office expense, Cost of Goods Sold (COGS), auto repairs, etc… It can be a small accordion folder like these from Amazon (affiliate).
Below is a list of accounts you can use to start. Some may apply and others do not. You do not need to add all of them. Just the ones that apply to your business.
If you invoice your clients more often than once a month, have a folder for each client and place only their paid invoices in their folder. That way, at the end of the year, you can see all the invoices each client had for that year. Place them in order from oldest to newest with the newest on top. Remove any cleared mobile checks from your clients and shred them. Write on the invoice, the check number, amount paid, and the date paid. You do not need the checks that cleared.
Now that you cleared up your paid invoices, it’s time to keep your books in order throughout the year.
Reconcile your accounts monthly. Better yet, update your transactions from the bank weekly. This way, at the end of the month it won’t take you long to reconcile your accounts. Make sure to print out the bank statement or have a folder on your computer to store these statements efficiently.
Try using Quicken for Home Business, QuickBooks Online, or QuickBooks Pro to manage your bookkeeping. Since you can set up downloads, this will save on entering all the data. Be sure when you download the right account is selected. The software may not pull the correct account so check carefully before accepting what the bank says has cleared.
Schedule time to get through your receipts and sort them. A great time to do this is after you reconcile your account. I place them in a bin and then at the end of the month when I reconcile, I sort the receipts into the accordion folder.
Some additional bookkeeping tips:
It is OK if you haven’t started at the beginning of your business. Just start from January in the current year so that you have a complete year of transactions.
When you get into a habit of reconciling and keeping up with your transactions, it will be a breeze to manage.
Feel free to visit our other bookkeeping tips for more tips.
I hope these bookkeeping tips for small business get you motivated to get your books in order. If you need help, please feel free to contact a professional. If you need a bookkeeper are want to keep your books clean and easy to read, feel free to contact me.