For many small business owners, keeping track of their books is a low priority until it comes time to filing taxes. This is when it becomes a mad scramble to find and organize all of the receipts and documents needed from the most recent period.
If you find that you do not have time to properly take care of your books, you should look into either hiring or outsourcing a professional bookkeeper. There are many options out there, but to ensure you have the lowest rate, and happiest bookkeeper, you need to ensure you get off on the right foot. Here are some basic bookkeeping tips to help put a smile on your bookkeepers face:
Have a Basic Understanding of Bookkeeping
In order to keep your books up-to-date, you should have a basic understanding of the accounting cycle, and how to properly record your business transactions. If this is a foreign topic to you, there are many ways to catch up. You can find beginner bookkeeping and accounting classes at local colleges and universities, as well as a variety of online courses that cater to small businesses. By having a better understanding of the accounting cycle, you will be able to distinguish your business needs, and decide whether there is a need to fully outsource your bookkeeping, or if you only require an accountant to file your taxes.
Keep ALL of your records and keep current
In addition to having a basic understanding of the accounting cycle, it is important to keep your books current, and have a hard or digital copy on hand. A common mistake made by business owners is to wait for the last minute to compile the records, and then file a tax return. This can lead to big problems, as records can be mismanaged, misplaced, or mishandled. Besides staying current, it is vital to keep all of your records, including bills, invoices, and receipts from business expenses. This will allow for your bookkeeper to reconcile the accounts with the use of primary sources, and in the case of an audit, gives first-hand information for any expenses being claimed. To put a big smile on your bookkeepers face, make sure your records are consistently updated in an organized fashion. One way to do this is through a document management system.
Rather than stuffing your bills, invoices, and receipts in the ol’ shoebox, take the time to organize your documents by date and client. This takes a little extra time in the short term, but saves a great deal of time down the road. Using an appropriate naming scheme for files (Ex: invoice0123_20130103 – Invoice#_date), combined with organized folders, allows for your bookkeeper to gain easy access to your files, which ultimately saves time and money. A common mistake for business owners is to combine their personal and business finances. This creates extra work in the long run, as your bookkeeper will have to continuously consult with you to verify which expenses fall into which category. Many of these problems can be managed with the use of an effective document management system.
Use Cloud Storage for Accounting Records
One of the most recent additions in the accounting world is the use of cloud storage services; many of which are dedicated to accounting and business related documents. Cloud storage allows for the secure storage of your scanned or uploaded documents, which are accessible in any location with internet access. This technology offers a great way to collaborate with your bookkeeper, as it allows for a shared space to store documents. An example of a document management service would be LedgerDocs; this system was designed with bookkeepers in mind, allowing for an easier solution to sharing and storing documents. In addition, LedgerDocs has a smartphone app that allows for you to upload a picture of a receipt or invoice, avoiding the need to give your bookkeeper hard copies of all your business documents. This system allows for simple and secure collaboration of documents between business professionals.