As a business owner, there is never any shortage of demands on your time. Between serving customers, managing employees, and overseeing daily operations, it can be hard to find time for anything else. Unfortunately, this can often cause important tasks to be overlooked. One of these often overlooked tasks is bookkeeping. Many business owners run into trouble (especially during tax season) because they don’t give bookkeeping the attention it needs.
To help you avoid problems down the road, here are five habits that will help keep your books under control:
1) Don’t procrastinate. Many business owners put off their bookkeeping for weeks or sometimes even months at a time. This can often result in an overwhelming number of transactions to record. Enter transactions and attend to your book frequently to avoid this situation.
2) Document expenses. It’s important that you are able to provide documentation for your business expenses. This is critical for tax purposes as the government will sometimes demand proof. It’s also important for strategic purposes.
3) Don’t lose track of accounts receivable. When you’re busy, it can be easy to lose track of which clients owe you money, how much they owe, and when payment is due. It’s important to create a system to ensure that you are paid in a timely manner. Don’t rely on your memory!
4) Reconcile your bank statements regularly. It is important that you frequently reconcile your accounting records with your bank statement. This ensures that all income and expenses have been accurately reported, and it makes it easy to detect fraudulent activity.
5) Segregate financial duties among employees. Finally, if you assign bookkeeping or other financial duties to your employees, it is critical that you don’t assign too much power to any one individual. No single employee should have the ability to both issue and sign checks, for instance. Requiring multiple employees to be involved dramatically reduces your vulnerability to fraud.
Bookkeeping can be an overwhelming task for a small business – and if you’d like assistance, I can help! Please contact me today to learn more.