Bookkeeping is crucial to all business operations. It’s not just something you should care about come tax time, but it’s something you should be doing throughout the year.
Maintaining accurate records is crucial for a business to be successful. Here are five bookkeeping tips you can’t ignore.
1. Determine bookkeeping needs based on your business operations and record-keeping method.
Different businesses use different bookkeeping methods, but the bookkeeping process is essentially the same for any business. It starts with setting up bookkeeping records (accounts) to keep track of your financial performance. Then you’ll regularly enter transactions into your bookkeeping records so they can be easily processed at tax time or when needed during company audits or reviews by lenders. Depending on the type of bookkeeping method you choose, you may need to have software in place that can help you automate this process.
The bookkeeping system that best fits your company depends on the size of the business, its location, how it’s financed, etc. We love using Quickbooks Online at LLP CPAs. If you’re looking to figure out what cloud accounting software is right for your business, check out our blog here.
2. Keep bookkeeping records up to date.
Bookkeeping records are ledgers that you set up to track your business transactions. They give you a complete picture of your financial performance from month to month and year to year. A lot of business owners make the mistake at the beginning of their journey of not updating their books often enough. When you don’t update them often enough, you may forget to include important data, or just as bad, make poor financial decisions that hurt your business in the long term due to basing decisions on out-of-date data.
3. Get into bookkeeping best practices as soon as you can after starting up.
If bookkeeping sounds like a tedious chore, don’t put it off until your bookkeeping system breaks down. You need to be proactive in bookkeeping best practices, particularly when you first start up the business so you can get in the habit of doing things efficiently. A bookkeeping system is only good if it’s used properly, and using bookkeeping systems in an automated way can actually help your business run more smoothly. If you aren’t sure of the best bookkeeping practices, look to hire someone who can help ensure you have your system set up properly.
4. Be sure bookkeeping records are accurate.
You might have bookkeeping software that populates some of these fields for you automatically, but there are many fields that are still up to you to enter manually at least once per month—and even those should be checked as part of an ongoing process to verify.
5. Know the difference between bookkeeping and accounting.
Bookkeeping and accounting are not the same. Bookkeepers record and organize the financial data. The accountant may consult with the bookkeeper; however, they have entirely different duties.
Here’s a chart we got from Indeed.com that does a good job explaining the difference between the two.
Need help with your bookkeeping or accounting? Our virtual accountants and bookkeepers are ready to help! Schedule a call today to learn how we can help.