Bookkeeping Tips📠

Tips for Business Owners

1. All new business owners should open a new bank account, preferably with online access, to separate business funds from personal funds. Processing transactions for your personal expenses within the bookkeeping of your business is a waste of valuable resources. The time your bookkeeper will spend classifying transactions as owner’s draw, could be used to enter additional business data. Also, online banking makes it easier to make payments, as well as access statements and bank data needed for reconciliations.

2. When the owner uses any personal funds for business purchase, these should be brought into the business bookkeeping system through bookkeeping journals. This will ensure that all expenses are being claimed and will reduce the amount of tax owed at year-end. Please don't forget to alert your bookkeeper and keep all the receipts and invoices.

3. Be sure to keep and organize all business transaction paperwork; these are your source documents and will need to be kept for 5 to 7 years. This will make it easy to track and provide proof to an auditor or tax prepare ass to what occurred. The best way to organize documents is by employing a filing system which could be paper, electronic, or online. It will be easy to locate and readily available when needed.

4. Cash needs to be recorded in the ledger as soon as it is received. Doing so immediately can ensure that you don’t forget which customer account to credit and/or forget to include it in the books. You want your books to reflect a true and accurate record of what has occurred.

5. The two main reports that a business owner will need to use is the P&L (income statement) and balance sheet. It is important to learn to understand them so you can know the financial standing of your business at any given time.

6. If you, as the business owner, are wearing many hats including bookkeeper, outsourcing may be best suitable for you. You only need to pay for the hours you need. This can be a cost-effective way to ensure your books are accurate and free up more time to do what you love. Your potential bookkeeper will be able to discuss the options they provide and help you determine what best suits the needs of your business.

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