It’s been quite some time since I’ve posted. I’ve missed my readers!
As of late August, I’ve been under contract to write “….A Survival Guide for Small Business Owners,” due out September 2014.
AMACON Books, the publishing arm of the American Management Association, is my wonderful publisher. Please mark your calendars in early September for the only book that will help small business owners survive in any economy.
This is the first book AMACON is publishing for small business owners. The book is all about reading your financial statements.
But great financials start with great data.
Here are four bookkeeping tips to help you keep good records for your small business
If you know what’s happening to your company’s cash flow, you can make decisions that will improve profits and cash flow long term.
Here are three easy small business bookkeeping tips that will save your sanity and help you get started.
Small Business Tip #1: Separate business from personal expenses.
Even if your business is not incorporated, open a separate checking account just for the business transaction. Run all business deposits and withdrawals through that one checking account.
You can make deposits from your personal account to the business checking account, but business expenses must be captured in one place only.
Keep a separate credit card account just for the business. Business credit card transactions should also be segregated from personal credit card transactions.
If you are audited by the IRS, it will be a much less stressful experience if your business and personal transactions are not intermingled.
Tip #2: Sign up for online banking.
You wouldn’t believe how few small business owners have done this. It will save so much time and hassle. You can link your accounts and pay your bills directly once the online account is set up. It will also provide an automatic journal of transactions, making it easier for your bookkeeper to do month-end reconciliation.
Tip #3: Save all your bank statements with cancelled checks.
These days, banks are trying to save money (who isn’t?), so some banks have started to charge extra to include images of cancelled checks in with monthly paper statements. If you opt for online statements, the images of cancelled checks should be included. Ask your bank.
The IRS considers cancelled checks as the only proof a bill has been paid. You need to have these images of cancelled checks and save these statements for seven years. Save these electronic statements to a backup drive just in case technology fails at the wrong moment (which is always). As much as I don’t like paper, I also print out bank statements and organize them in a fireproof file cabinet by date, just in case. This system has never failed me.
For the next several weeks, I’ll be focused on making sure your weekly process of capturing transactions is organized. Record keeping is so crucial.
If the data you enter into your accounting system is not accurate, your financial statements will be no help to you. And your financial statements hold the key to the future of your small business.
So let’s start the New Year off on the right foot.
- Open up a separate business account.
- Open up a separate business credit card.
- Sign up for online banking.
- Keep your monthly bank statements with cancelled checks accessible.