When dealing with your financial records, it is important to have quality bookkeeping software. Purchasing a program like QuickBooks will allow you to track your income and expenses and prevent multiple financial problems for the company like missing payments, forgetting to invoice customers, tracking your deductible expenses, etc. Here are some basic bookkeeping tips that will allow you to keep accurate records and provide your customers and investors with the best information and service possible:
- Invoicing. A lot of small businesses get into financial trouble because they neglect their accounts receivables. If you aren't good at invoicing your customers, you will only cause problems for your business. It is in your best interest to purchase a good bookkeeping program that will send due date reminders to you for your invoicing and for your vendor payments. Always create an invoice at the time of sale. This way you can hand it directly to the customer or you can mail out as soon as possible. If you are offering a term of Net 30, you need to make sure it gets to the customer faster so they can pay it before the due date.
- Notifications. If you aren't great at paying your bills, enroll in automatic bill pay with some of your vendors. Most of your credit card companies and other lenders will use automatic bill pay in order to ensure timely payments. A quality program like QuickBooks can send you notifications so you remember to pay your bills on time. There are some bills you just cannot afford to forget about like your quarterly taxes, payroll taxes, etc. If you miss these deadlines, you will have an IRS agent knocking at your door and you will face a harsh penalty. Notifications are great because they will help you remember to pay your bills in a timely manner so you don't ruin your credit rating by forgetting to pay your lenders.
- Create an audit trail. For every single thing you deduct on your taxes, you need to have records to support it. Create an audit trail for the IRS in the event that you are audited. They will look for a paper trail that shows payments, expenses, etc. As long as you hang onto your receipts and you have a method to file them properly to keep them organized, you shouldn't have any problems with the IRS.
- Reconcile your accounts. Set up your accounting software to pull information directly from your bank accounts. Most of the programs out there will actually "talk" to your other accounts and will record every expense, payment, deposit, etc. By doing this you will have an easier time tracking your accounts and preventing problems that may arise like forgetting about a bill and over-drafting your account. Thanks to online banking you can easily log into any of your accounts and print off a statement or even copies of cancelled checks and receipts if you need them. Use online banking and forgetting dealing with the paper statements that just waste space. This way you can print out the statements only if you need it so you aren't just wasting paper.
- Proper training. If you aren't going to be the only person using the accounting program, make sure each one of your employees is properly trained on how to use the program. Training will allow them to input accurate information in the correct areas and it will help you run your business successfully. Remaining consistent with your bookkeeping efforts will help you track everything correctly and it will make it easier to gather the information you need for the IRS.