A good bookkeeping system can make a big difference in your business. Once your system goes bad it is of no value to you or your business. When you create your bookkeeping system you need to understand what your goals are and what you are trying to accomplish with the system.
You will want to automate your bookkeeping process wherever possible. Quick Books is a great bookkeeping tool; it allows you to integrate many of the systems you need and automate a lot of it. If you are going to do your books on your own, this is a great platform to use.
The next thing you will need to decide is how often you are going to update your books. This is going to be a personal preference, however the more often you do it, the more accurate things will be. If you don’t keep things updated, you can easily overlook something, and it won’t get logged properly. Technology has made progress and has gotten the bookkeeping process simplified. With daily logging, you are looking at maybe 5 minutes of entering a day.
Having up-to-date books allows you to use Key Performance Indicators on a regular basis to evaluate your business. By knowing and understanding the KPI’s for your business, you can quickly identify potential issues and make quick changes to impact your bottom line. By being able to make changes quickly in your business, you can save yourself a lot of time and money on processes that may not be working. You will be able to identify potential loss or theft quickly. There are so many benefits to keeping your books up to date daily.
Reconciling your statements against your books regularly again is a very big benefit to keeping accurate books and identifying potential issues. By reconciling to a monthly statement you are providing the accurate data that you have everything accounted for. Now, whether or not it is coded to the right account is a whole other story.
The best thing you can do for your business’s bookkeeping system is to reconcile it to the monthly statements. However, don’t stop with just your bank accounts and credit cards. Make sure you also reconcile all loans, lines of credit, payroll liabilities, and any other liabilities you have.
Having accurate books will make your life easier in the long run. When tax time rolls around, there is nothing you need to search for and everything is right at your fingertips. Nothing gets overlooked either, it is imperative to your business to have accurate and up-to-date books.