Simple bookkeeping tips
Bookkeeping has gotten a lot easier with software programs like QuickBooks. These software programs allow you to input numbers and the program will do everything else for you. When you are dealing with your finances, here are some simple tips to follow:
Manage your invoices
The invoices you deal with will help keep your cash-flow flowing properly. Purchase invoices are used when you work with your vendors and you are purchasing raw goods. Sales invoices refer to the agreement you make with your customers to purchase your products in exchange for their payment in a set amount of time.
Put time frames on your invoices so you can have plenty of time to collect the money your customers owe you before you need to pay your vendors. If you are struggling with your customers and they aren't paying their invoices on time, start asking for 50% of the payment up front. This gives you enough money to cover the cost of your inventory and you can collect the rest of the money in 30 days. If your customer still doesn't pay, consider selling your old invoices to a factoring company. They will provide you with money now and they will collect the money from your customers. This is the best way to keep your cash flow from running into problems.
Calculating taxes, insurance deductions, and retirement deductions can become a little overwhelming. If your financial software program doesn't automatically handle payroll for you, you may want to contact a payroll company to do everything. In addition to paying your employees their appropriate amount, they can set up auto-payments so you don't need to worry about missing pay dates and its guaranteed that your employees will be paid. The other nice thing about a payroll company is that they will send out your W-2 statements and 1099 statements.
To make sure you have enough money in the bank to pay for everything you need to work on your books daily. Keeping daily records allows you to balance your accounts to the penny and you can also track your financial progress to find out which sales and marketing promotions are working and which ones aren't. Daily records only take a few minutes to input and it will save you from spending hours in front of your computer to balance your finances at the end of the month.
Ask for bank statements
Part of maintaining good records also includes checking your bank statement and making sure your books are in sync with them. Most banks provide you with online statements and bank access so you can watch your books and sync them daily so you don't get off track with your expenses.
Keep good records
Always maintain good records because you never know when you will be audited. Companies that keep their financial records written down on paper are 50% more likely to be audited. Keep a duplicate copy of each check you write and always have good payroll records. Payroll audits are common for small businesses. If you calculate payroll on your own, use an Excel file or another electronic way to keep good records and to hand over to an auditor in case you are flagged for an audit. You will need to provide about 24 months or longer of your payroll if you are flagged for a payroll audit. Electronic programs are better as you have a way to back-up your finances and you can email them off to an auditor or your accountant if you need to. This is much easier than copying the paper files and faxing them to your accountant or having to mail them into your accountant.