Running your own business means that keeping accurate records of your company accounts, is an unavoidable burden. Staying on top of what money is coming in and what money is going out, is essential if you’re to keep in favour with the IRS, know whether you have the funds available to get you through each month, and perhaps most importantly, to enable you to see if you’re making a profit or not.
Here are a few standard do’s and don’ts of company bookkeeping, to help you and your company stay on top of the accounts:
DO record all your incoming and outgoing transactions. Your bookkeeping system doesn’t have to be complicated, it just needs to be a simple record of money coming in, and money going out. If you’re an ‘old school’ business owner, you can simply keep a book with this data stored in it, or create a simple spreadsheet where the data can easily be referred to.
DO make time to complete your bookkeeping. It’s imperative that you complete your bookkeeping tasks on a regular basis, whether it be weekly or monthly, to ensure that you can stay on top of it.
DO securely store your paperwork in a fire resistant safe, and make sure that all your receipts and invoices are kept together. It’s important to try and keep your personal paperwork separate from your business paperwork, too, otherwise it could get very confusing when you’re trying to settle your books.
DO give a different number to every invoice and keep your numbering system simple and easy to use.
DO keep a close eye on your turnover, and if your taxable turnover for the last year happens to go over the tax threshold, then you will need to register for sales tax.
DO check your bank statements every month and make sure that they match your own bookkeeping records.
DO seek professional help. Hiring a bookkeeper to help run your accounts could be one of the most valuable decisions you make for the benefit of your company, as not only will they keep on top of your finances, but they’ll give you all the information and guidance that you require, enabling you to focus on other aspects of running your business.
DON’T complicate your paperwork. A simple system is best all round and will help to keep the taxman on your side.
DON’T have lapses with your bookkeeping. Stay on top of things and try to avoid stacking up paperwork to tackle in one go. Break it down and file regularly to avoid confusion or the risk of mislaying important receipts, invoices and other documents.
DON’T muddle up your personal expenditures with your business expenditures. The two need to be kept separate and you should ideally have a different bank account for personal and business use.
DON’T get rid of anything for at least six years after your business was created. Some bookkeepers will advise you to keep receipts and invoices for even longer, should you happen to be investigated by the IRS in the future, but keep 6 years in mind as a guide.
Keeping your accounts in order is perhaps one of the most important aspects of running your own business, and if in doubt, simply hire a professional to help you get them right. Staying up to date with state and federal regulations and laws surrounding taxes can be complicated too, and a bookkeeper will help ensure that you’re always tax compliant. It may seem like an unnecessary expenditure, but often it can prove to be the best decision you can make for your business.