Bookkeeping tips for new businesses

Opening a new business is exciting but it is also full of its fair share of risks. When you open a new business, you are now in charge of wearing several different hats, one of which is bookkeeping. Bookkeeping is essential to a small business as one simple mistake can ruin your business. It is important for you to take the time to understand how to keep your financial records accurate and to use a method that works for your company. Most businesses use a program like QuickBooks or Peachtree. Both are simple and easy to use and can accommodate just about any type of business.

To get started with your bookkeeping records, begin by hanging onto all the receipts you have. You will need these receipts to properly manage your books as you need to include every transaction no matter how small it is in your register. Even if you use a credit card to pay for things, hang onto those receipts because you never know when you are going to need them. You need the receipts if you are deducting expenses. The IRS needs proof of your deductions if they choose to audit you so it is imperative that you have good records to back up each and every deduction.

Have a strong accounting method. The other thing the IRS is going to check up on is your cash flow. If you have a lot of petty cash you are dealing with, this can be tricky. This is where receipts can help as it is the only evidence you have to prove that you paid for something and that is why you are deducting it. A tip for businesses, whenever you are paying for something that you can deduct, use a credit or debit card because they are easier to track. Balance your cash register daily and keep records of this as well. This will keep your employees honest and having a bunch of cash right in front of them can be a temptation for a lot of people.

Use a good accounting program to manage your books. You will want to look into a program that offers you invoicing, payroll, check register, etc. This helps you to track your financial records and can prevent overdrafts on your account. It's a good idea to look for a program that also includes sales numbers and reports along with inventory control. QuickBooks and Peachtree both include these features and they can be a wonderful asset to your business.

Don't withhold cash from your deposits. Always deposit your income so you don't have inconsistencies with your books. If you are depositing cash, make sure you hang onto those deposit receipts as well because they IRS may need to look over them if you are reporting a certain number of cash on your taxes.

Balance your books daily. Make it a habit to balance your books with your bank account daily. This way you can predict your cash flow situation for the short-term and for the long-term. It is one of the smartest things to do in order to keep your business running properly. Using a program like QuickBooks will make it easier to balance your accounts and you can set it up with your bank account to report information like deposits and withdrawals.

If you don't know how to calculate withholdings from your employee's paychecks, consider hiring a payroll service to help you. For a small fee they will send out your paychecks to your employees and they will also provide you with W-2s and other great information to provide your employees with fast service.