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How to Make Bookkeeping Easier and More Accurate

Every business owner knows the importance – and sometimes the downright nuisance – of bookkeeping. But whether you love it or hate it, you also know how important accurate books are to the success of your enterprise. Bookkeeping is mostly common sense, but errors can be expensive for the company, and consequently for you. Here are a handful of helpful reminders that will help save you time, frustration, and money.

Track your reimbursable expenses. It's so easy and convenient to pay expenses out of your own pocket or put them on your personal plastic, but if you fail to track those expenses, you're not doing yourself any favors. Make it a point to track them and submit them for reimbursement.

In retail, remember to separately state sales tax collected. It's an easy mistake to make, but important to keep in mind, because it has the effect of creating a falsely high total sales amount, and does not lower the amount of taxes due.

Be picky about petty cash. Think of it as an opportunity to demonstrate how thoroughly professional you are about your business. Set up a system that requires that each time funds are taken from petty cash, a petty cash slip is filled out. When the cash fund is exhausted, make sure the slips total the amount of cash you started with. It may be called petty, but it can get expensive if it’s not controlled.

Save those receipts - always. Even if the smaller amounts aren't required by the IRS, they can be important backup documentation for the deductions you may claim. Simply set aside a specific folder for them and get in the habit of dropping in the receipts. And for business meals, be sure to write on the receipt the name of the person you met with and the business purpose for the meeting.

Maintain a mileage log. Whether you have a fleet of vehicles or you use your personal car for occasional business use, always maintain a mileage log. Show the date, start and ending mileage, the destination, and business purpose. Otherwise, your deduction for mileage and more may be disallowed. Get in the habit by keeping a log book and pen in your car, within reach.

Classify employees carefully. If you're like many small businesses these days, everyone who does work for you isn't necessarily an employee. Some may actually be independent contractors, consultants, or freelancers, so make sure they're classified that way. There are different rules for employees and non-employees, and when it's time to file your taxes, those differences will be very important.

Consider not doing it yourself. No matter how strong your do-it-yourself instinct, sometimes it just makes more sense to hire a professional. The expense can be well worth it, and could easily free you to spend more time on the creative side of your business, which is probably why you started it in the first place. Believe it or not, there are people who enjoy bookkeeping as much as you do being a mogul-in-waiting.

Regularly reconcile the books with bank statements. That means every month, without fail. It's a fundamental that is a foundation of accounting. If that's a bitter pill for you to swallow, consider it another reason to use the services of an experienced bookkeeper.
 

Contact Debra Rowand CPA today to learn how your small business can benefit by working a professional accounting firm.Return to the list of articles.

 

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