Are Your Finances a Mess? These bookkeeping basics can help you get organized.
As a small business owner, making sure your books are in order is one of the most important things you can do to make sure your business is on the right track. While going through your financial records can be initially daunting, it doesn’t have to be an overly complicated process.
In this blog, we will outline a few bookkeeping basics that will help you get organized and keep your business in good financial standing.
Reconcile Your Accounts
First and foremost, you need to go through your books and reconcile your accounts. Admittedly, this is usually the most tedious part of the process but it is one that you will benefit greatly from long-term.
Go through your bank and credit card statements and make sure you know where your money is going. Start from the beginning of your balance and go through each charge and line item. Make sure you have the receipt, or at the very least, know what the charge was for so you can properly categorize it.
The reconciling process will first ensure that you have recorded all accounts that cleared the bank or credit card statement. Once it does, take a good look at any remaining reconciling items. These are any items – deposits, checks, charges – that were posted in your accounting system but that have not yet cleared the bank. Legitimate reconciling items occur due to timing differences, held checks or even lost checks. So review these often and if there are any that are questionable or become long-outstanding, investigate.
Build a Payments Cadence
While they can be tedious and time consuming, you should not delay data-entry and reconciliation until the last minute. Make sure that you are reviewing your books once a week so you can stay on top of things.
Set a recurring calendar alert to remind you and make sure that you are setting a cadence for making your payments. This will help your books always stay up to date and help you avoid needing to scramble at the end of each month.
Prepare for Tax Season Early
If you are keeping a standard payment cadence, preparing for tax season should be a breeze. Make sure that you are tracking your expenses and cataloging receipts every month so you are ready for tax season when it comes.
Keeping these records clean and maintained will help you find the maximum deductions and make sure that you can validate all of those deductions should the IRS come knocking.
Hire and Bookkeeper and Use an Accounting Tool
At a certain point, the free accounting software isn’t going to cut it for keeping track of your business expenses. Hiring a bookkeeper, even part time, and using a professional accounting tool will not only help save time and keep you organized, but it will also ultimately help you scale your business. There are a lot of software options out there so make sure to evaluate what your business needs and select accordingly. Most accounting softwares have reconciliation and tracking tools that can help to guide you through recordkeeping and a skilled bookkeeper can help you to manage your records appropriately.
Consider MCK Accounting Services
Still not sure where to start or do you simply need professional help? The experts of MCK’s accounting services department are ready to assist you will any and all questions you have to solve your accounting challenges. We offer all levels of services including account reconciliation and cleanup, payroll and payroll filings, sales tax filings, monthly and quarterly accounting services and more! Contact us today.