6 Tips to Improve Your Bookkeeping Process
Bookkeeping is a job that requires meticulous care and effort. It is one of the most vital things necessary for any company because, without a proper bookkeeping process, the entire workflow can be put in jeopardy. When you aren’t able to keep track of the yearly spendings, you will eventually end up with issues pertaining to payroll, taxes, and overall profitability.
If you’re looking to improve your bookkeeping process, here are six tips on how to do so:
1. Keep every receipt
It is important that you keep track of every receipt from every transaction, organizing them according to the date, type of transaction, and the amount of money involved. This is a crucial step, as it will allow you to have accessible evidence of every trade that has ever taken place. You will have physical proof for the transaction whenever you need to refer back to it. This will help to ensure that you can cross-check every claim made against you, as you will have something to support or refute the claim.
2. Reconcile the bank accounts of your business
Make sure that you reconcile your bank accounts to identify any errors that may be in the financial records of your company compared to that of the bank. If you find an error during this process, you can fix it with the bank and ensure that everything is correct and accurate. Handing the balance over to the bookkeepers without cross-checking it with the bank first will make it difficult for you to fix anything once the statement has come out. Therefore, you need to make sure that you get the reconciliation done as early as possible, as it can save a significant amount of time and money in the future.
3. Separate personal and business expenses
This is a mistake that small businesses are especially prone to making, as they often combine personal and company expenses. Not keeping your personal and business expenses separate will muddle up the bookkeeping process because you won’t be able to determine the exact number of business expenditures. Not only does this affect the bookkeeping process, but it will impact accounting and legal issues as well. If a problem should arise, and you need to use a detailed version of your financial statement as evidence, your report won’t be on your side. To avoid this stress, make sure that you have a clear organizational system in place that can separate all the expenses clearly.
4. Use Quickbooks
One of the best ways to streamline the bookkeeping process is to go paperless. This means that you move all your bookkeeping work to a Cloud-based system that can be updated in real-time. This allows you to automate much of the tedious work, which frees up a considerable amount of your bookkeeper’s time. You can allocate that time for them to work on something more important such as checking the paperwork or doing other accounting-related tasks. Apps such as Quickbooks can help to cut down the time required for the bookkeeping process, streamlining the workflow significantly.
5. Keep track of all your tax-related forms
If you pay an independent contractor or employee during the taxable year, you will need to fill out the W-9 and 1099-MISC forms. A W-9 form will have all the contractor’s tax information which will then be used to refer to how their tax is to be sorted. The 1099 form is for the IRS to track the payments to the contractor and freelancers so that they can add to the tax returns. Lastly, the W-2 form is for your employees to file with their taxes. These are a part of bookkeeping work that will ensure that you’re not liable for any fees or charges years down the line.
6. Work with a professional accounting consultant
When you run a company, there are a lot of expenses that you must keep track of. It can be overwhelming to stay on top of your finances, especially if you’re not a professional accountant. Therefore, it’s almost always a better idea to have a financial consultant on your side. A great consultant can help cut through the noise and focus on how you can improve the workflow of your bookkeeper and accountant. Make sure you look for a consultant who has a CPA certificate along with years of experience. Accounting isn’t nearly as easy as many make it out to be and there’s a lot for one to know. With experience comes the ability to understand the intricacies of the overall field which will ensure that they can do the best job.
Totally Booked offers bookkeeping by QuickBooks Certified ProAdvisors based out of NYC. Get in touch today to see how we can help!