Small business owners often undertake tasks that they are not trained for in an effort to save money. One of the most common tasks that are done in house, but should be done by a trained professional is bookkeeping. No matter who does the bookkeeping, there are 10 best bookkeeping practices to keep in mind.
1. If bookkeeping is not for you, you'd be much better off finding someone to take over this job. Well trained, experienced bookkeepers will help you track all of your income sources and expenses. A bookkeeper has the skills required to do the job efficiently and quickly. Many times a bookkeeper will serve as a second pair of trained eyes, spotting errors and making suggestions for improvement.
2. Make use of quality accounting software. A good software program will help you track expenses and income, posting them to the right accounts. You will be able to see exactly what your gross sales have been and what you've spent on office supplies.
3. Provide realistic solutions to cash flow issues and bankcard payments. Knowing what you have coming in each month and what your expenses are is critical to handling cash flow. An experienced bookkeeper will offer solutions that will work if there are issues from time to time in this area.
4. Most bookkeepers will have at least a working knowledge of how merchant accounts work. This is critical in order to negotiate the best rates and catch errors on monthly statements.
5. Credit card and bank statements must be reconciled each month to ensure no entries to you checkbook were missed. Every bit of money going out must be accounted for.
6. When clients are invoiced, outstanding invoices and collection procedures should be monitored. Be sure that every invoice includes the payment terms. These terms should be included in a contract if you use contracts.
7. Be very consistent. Specific times of the day, week, or month should be set aside to organize income and expenses into your accounting program. If you schedule specific times for these tasks, and stick with your schedule, each of the tasks will be much less daunting. Never allow things to stack up.
8. Keep a supply of any accounting or bookkeeping forms on hand. By keeping anything you may need on hand, you will make the best use of your time.
9. Use separate checking accounts for business and personal. Not only will this make it easier to reconcile your books each month, you will look a lot more serious to the Internal Revenue Service.
10. Always back up you data. This is something that I just can't stress enough. If you have a tragedy like a hard drive failure or a power surge, you risk losing all your data if you don't have a backup copy of your booking data. It doesn't matter if you backup to an online service, and external hard drives, or a thumb drive, just make sure you backup your files.
These 10 best bookkeeping practices are just a sample of what you should do when if you do your own bookkeeping. Of course if you outsource your bookkeeping with Off-Site Business Services, you won't have to worry about any of this.