Keeping your small business running smoothly requires keeping accurate financial records. You don’t need to be a master bookkeeper to handle the day-to-day record keeping for your business.
Decide which accounting system works best for your business: cash or accrual. Cash method counts income as soon as it comes in and expenses as pay them. Accrual method counts income and expenses as they occur as opposed to when it is received or paid.
Day-to-day, every day record keeping is vital. Developing a good system and sticking with it will ensure that your daily bookkeeping will only take you a few minutes a day. Find a system and a routine that works for you.
Use a computer. For all but the smallest of businesses, using computerized bookkeeping programs and apps will make your life easier. You’ll be able to print tax documents, summarize income worksheets, and track income and expenses easily. Many will even download transactions directly from your bank.
Get an end of month cut off on your business bank statements. Having an end of month statement date will keep all your records synchronized and make it easier to reconcile your bank statements every month.
Treat checks like cash. It’s very easy to get sidetracked when writing out or filing away cancelled checks. Remember that your business will be on the hook for any check writing errors. Perfecting a unique signature will cut down on the risk of forgery. If your business is a partnership, it may be wise to require a partner to co-sign checks.