Bookkeeping differs from accounting in that the accountant is responsible for accounting records, sales documentation, purchases, payments made, etc. This information is kept in the assigned books or ledgers, which are then balanced to ensure financial data is consistent. Small businesses usually maintain their own records to save money.
Since the bookkeeper deals with issues that reflect the financial condition of the company, there is very little room for error. A company’s accountant depends on the activities of the bookkeeper in the preparation of financial documentation and communication. As with other business functions, there are several “best practices” in accounting, which, after implementation, can significantly affect the overall productivity and efficiency of the company. Here are some organizational tips to help you get the most out of your bookkeeping, and prevent your business from going into debt.
1. Hire a Bookkeeper
In the beginning stages, most business owners will handle this themselves. As the business grows, it may become inconvenient for a business owner to continue managing this. Without knowledge of accounting, there is the potential that the financial records won’t be recorded properly. Because of this, hiring a bookkeeper may help you avoid costly mistakes.
2. Documentation Is Key
You need to maintain accurate records of all of your transactions. For daily transactions, it’s crucial to record and document everything. The bookkeeper needs to keep tabs on the daily activity so the information is accessible at any time for you and the accountant. Dates, times and location information will be helpful during future audits. Documenting as much information as you can will be beneficial for everyone.
3. Back Up Your Data
This is one of the most crucial rules to follow. In a small business, if you find it difficult to maintain safe and reliable backups, you should consider choosing a provider that can manage your accounting functions for you. There are plenty of cloud-based storage options that will allow you to keep your records secure and online for years to come. Ensuring your data is safe is vital for your business, employees, and customers.
4. Use Accounting Software
It goes without saying that many things that were once done manually are now replaced by computers. This is no less relevant in the field of accounting. There are many accounting programs that you can use to meet your bookkeeping and accounting needs. QuickBooks is standard for small businesses, but there are plenty of other paid and open-source software solutions for you.
5. Outsource Accounting and Payroll
Last, if you have the budget for it, you might as well outsource your accounting and payroll to a firm that specializes in these services. Companies like Gusto LLC and Paycom Payroll LLC are leaders in this industry and should be considered as highly efficient options for managing these services. These type of companies usually offer other services as well, including HR, tax, benefit plans, and other related services. Keeping all these services with one company will make the end-of-year tax preparations a breeze.
Read Next
