If there is one thing I’ve learned while running a small business, it’s that nothing gets accomplished without organization. While there must be room for “creative freedom” in most industries, simply being organized makes a huge difference in the every day and long term operation of the business.
When starting a business, in many cases, one begins with a great idea. A person sees a market need or comes up with what they believe to be an amazing service or product and they are ready to hit the ground running! While this drive, passion, and ambition is admirable it’s imperative that this innovative businessman or woman step back and make a step by step strategic plan for the future. They have to get organized!
Whether beginning a new company or maintaining a current one, disorganization can be a huge issue.
Financial disorganization can cause the biggest problems. Here are a few simple bookkeeping tips on how to get and stay organizing and avoid finding yourself or your business in a financial mess.
1. Bank account statements
- Request a statement with month-end cut off date. This will save time when reconciling records with the bank statement each month.
- Do not file statements and canceled checks without reviewing them.
- Review statements immediately for unauthorized checks.
2. Cash or accrual?
- The cash accounting system is typically much easier to maintain
- The IRS allows you to use the accrual system if you have $5 million or more in sales or if you carry large inventory.
3. Keep audit trail.
- This is just a record of all your invoices and checks in numeric order.
- Be sure to never skip numbers.
- Record voids in numeric order as well, just mark them as “void”. This assures that there are no gaps in your numeric system.
4. Deposit cash right away.
This ensures that all income will be properly recorded.
5. Keep records stored on a computer system.
It’s important to frequently back-up this information and may even be a good idea to keep paper records as well.
Some of the most important things to remember, but easiest to forget, are simple, basic principles like be consistent and don’t overcategorize. The best strategy is to have a structured system of staying organized from the beginning, work it into employee training, and do what you can to maintain the organization of your business.