Bookkeeping is no small task in any business, nor is it unimportant in the least. Accurate, effective, timely bookkeeping is an absolutely necessity in order for any business to survive, let alone thrive. This is especially true as a business grows larger or more complex. It's critical to be able to follow every transaction undertaken by the business, to understand the impacts of different lines of business and other factors on the bottom line. Bookkeepers must be honest, vigilant, and sure to follow these do's and don'ts.
- Do: Make sure that every single transaction reconciles. Every month – if not several times a month – you should check balances and transaction records at each financial institution where your business has accounts. This is true for checking accounts, credit cards, lines of credit – any form of account. Each and every transaction that is reflected should reconcile with transactions shown on the company's books, which should be kept independently. Any discrepancy should be addressed immediately and resolved, even if this means involving a company manager or owner.
- Don't: Fail to use dual-entry accounting. Every one of the company's transactions should be entered twice on the company's books. Each should be recorded a change in either assets or liabilities – a debit or credit against a checking account, loan or line of credit – and then be reflected again (the dual entry) in the appropriate category of income or expense. If you need to study or review principals of accounting to make sure your understanding is adequate, be sure to do so. However, dual-entry accounting should ensure that books will always, always, always balance.
- Do: Engage an auditor or accountant for regular financial reviews or full-blown audits. A second set of eyes can be helpful – especially when dealing with numbers. However, having work independently reviewed, confirmed, and reconciled will also reassure company managers and owners of the accuracy of your work. An independent review may also point out potential problems that you may not have noticed, or lead to new ways of managing certain aspects of company financials that might be helpful. Most importantly, though, independent reviews or audits should cut down the odds of any errors that could prove much more difficult to unravel later on.
- Do: Ensure that all tax filings are completed and filed on time, with necessary payments remitted in full. Failing to file and pay taxes can have serious repercussions for a business, and potentially even lead to bankruptcy. As a bookkeeper, one of your responsibilities should be to make sure all filings are accurate, and that they are prepared and submitted in a timely fashion. If payments need to be made – especially out of company accounts – you should be sure that those payments are properly submitted and reflected in your records.
- Don't: Ignore control risk. Control risk can unfortunately open the door to theft or malfeasance with company funds. As such, it needs to be kept closely in check and monitored. You, your company managers and owners should be aware of who has access to accounts, signing authority, bank login info, or the ability to initiate wire transfers. Try to keep the number of people with these abilities to a minimum, and make sure that the company owners are comfortable with who has what authority. This is one of the items that independent auditors will check on this also, and can advise on any recommended changes.
- Do: Manage finances in a way that they can be broken down to their most minute detail. It's extremely important for company managers and owners to be able to break down and assess the costs of individual employees, units of output, or lines of business. The way you keep the books should enable managers to glean as much insight as possible from finances about value of employees, areas of business, and so on. They need to be able to weigh options and potential changes in operations, as well as any potential investment in new capabilities. The more detail you can provide about company finances, the better.
Being an effective mobile bookkeeper is a full-time job. It's extremely detail-oriented work and requires intimate knowledge of a company's financials and areas of operations. You need to be able to anticipate needs of owners and managers, ensure the accuracy of your work, and protect the company against theft or malfeasance. It is also your job to minimize the risks of inaccuracy, delayed filing or payment of appropriate fees or taxes. You are the first line of defense against misappropriation of company funds, as well as spotting operational inefficiencies. If you follow these do's and don'ts, and do your job well, the company can survive and thrive.
Guest Author: Irena Mckenzie
Irena is a Castle Hill local and is the successful small business owner of Irena's mobile bookkeeper services. She has many years' experience in all facets of bookkeeping and office work. She has run various small businesses for many years and understands exactly what it takes to get a small business up and running at full speed.