6 ways to simplify your bookkeeping for the new year
Bookkeeping can be a tedious, detail-oriented and time consuming task but it is essential and necessary for any business. Bookkeeping not only ensures you have an accurate record of all official transactions for auditing purposes, year-end statement and tax filing requirements, but it’s also an important indicator of the health of your business. Bookkeeping provides business owners a clear picture of how much money is coming in and how much money is going out of the company’s cash vault, which keeps businesses in check. Given of the above reasons, there’s a clear advantage to be had when you simplify your bookkeeping.
Simplify your bookkeeping in 6 steps
While bookkeeping can be a lot of work, there are actionable ways to streamline an otherwise demanding task.
Always keep records of all expenses.
Choose an online bookkeeping software.
Use an online payroll system.
Keep your personal finances separate.
Avoid cash and keep all transactions electronic.
Develop a weekly bookkeeping schedule.
With these tips, you can simplify your bookkeeping so you spend less time looking at numbers and more time focusing on growing your business.
1. Always keep records of all expenses
This is the cardinal rule of bookkeeping. Always make sure your expenses and transactions are recorded and well accounted for to avoid any trouble come auditing time.
That includes invoices, accounts payables and receivables, payroll records and receipts of all official business transactions. If you are able to record and efficiently keep track of all these documents, it will be quick and easy for you to prepare tax filing requirements at year end.
2. Choose online bookkeeping software
An efficient way to make your bookkeeping tasks more manageable is to use online software that helps you perform various accounting functions. Different accounting software provides users with a number of features, but the essentials must include day-to-day business basics such as paying bills, invoicing customers, importing bank and credit card transactions, and running key financial statements.
Editor’s note: Need an online bookkeeping program? Check out GoDaddy Online Bookkeeping for a simple, easy-to-use platform that will help you organize your finances in one place.
3. Use an online payroll system
Apart from business expenses and transactions, another important and recurring cost is paying employees. The good thing is that online payroll systems can be integrated with most accounting systems, which lessens the manual work of inputting numbers into your bookkeeping records.
Choose an online payroll system that helps simplify your bookkeeping by performing various employee compensation requirements, such as payroll preview, salary direct deposits, tax remittance and filing, compliance features, as well as claiming benefits.
4. Keep your personal finances separate
It is important you keep your business transactions separate from your personal expenses. It is certainly a ground rule if you need to simplify your bookkeeping. One of the most common mistakes business owners commit is forgetting to track and separate personal finances from official ones.
This usually happens when there isn’t a corporate credit card on hand, so business transactions are made using personal credit cards.
Failing to separate these transactions will create a headache when you file for reimbursements, and some personal money might be forgotten along the way — or company money might accidentally go to personal expenses.
An effective way to separate these two is using a company-issued corporate credit card for all official business transactions. This is particularly helpful when tracking expenses during tax time as all expenses are in one billing statement. Additionally, having an official account will help a business owner or a finance person see, at a glance, all the official transactions made — and no little purchases will be forgotten.
5. Avoid cash and keep all transactions electronic
A great way to simplify your bookkeeping is doing transactions electronically (when possible). While paying with cash is unavoidable, using your corporate credit card as often as possible helps in recording expenses, as they will simply show up in the monthly account statements and will go straight to the finance team.
However, no matter how much you pay using your corporate card, be sure to keep receipts in case they need to be presented at some point. If possible, scan the receipts right away to keep electronic copies, as some printed receipts tend to fade after a while.
6. Develop a weekly bookkeeping schedule
The most efficient way to keep your books and financial records up to date is doing it regularly. If possible, try to establish a schedule and set aside a couple of hours before the end of each week to check your cash accounts, get out invoices and replenish cash reserves.
Apart from keeping your memory fresh from doing the tasks regularly, it will also help you avoid mistakes, as you don’t need to account for records more than a week old. This practice will give you a warning if something is wrong with your numbers. Doing your bookkeeping tasks sporadically and at the last-minute will not only consume a lot of your time, it is also not an ideal way to stay on top of things.
Bookkeeping bottom line
Trying to simplify your bookkeeping requires time and great attention to detail, but it doesn’t need to be a rigorous task if you put a proper system in place. Knowing the right online tools also provides a lot of benefits and will relieve you from manual tedium.
While it takes time to establish a routine, doing so has its rewards in the long run. It’ll help you keep your finances in check and make sure that your business is tax compliant, eliminating possible financial-related headaches come tax-filing season.
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