Here is the big misconception…
Most people assume bookkeeping is about putting in long hours and sacrificing their Sunday to catch up on paperwork.
I am here to tell you- there is another way!
It’s simply about your habit patterns when it comes to the task of bookkeeping.
If you are reading this… it’s safe to say, you are not satisfied with how your bookkeeping is going.
So – great job being proactive about it and trying to fix the situation.
We are going to set some new habits in your bookkeeping and show you exactly:
– What you need to STOP doing
– What activities you should be FOCUSED on
– How to QUICKLY find and fix errors
– How to spend LESS time doing your books
HERE WE GO!
What you need to stop doing!
1) Not having digital versions of documents
You should have a binder with all receipts, invoices, and other documents necessary for effective bookkeeping. However, it is beneficial to also have digital versions of all documents for easy access. There is something wonderful about having all your files with you.
In order to take action on this, get Evernote Premium or Onenote. They will allow you to save photocopies into folders and have access to it on the web and mobile.
Read this for a list of apps that will help you keep track of your expenses : 4 TOOLS THAT MAKE TRACKING YOUR REAL ESTATE EXPENSES EASIER.
2) Forgetting to crosscheck with bank statements and receipts
As human beings, it is natural to make mistakes. Taking this into mind, it is worth setting aside some time each month to crosscheck your bank statement and receipts with your books. The sooner you realize mistakes and rectify them, the better. They can end up snowballing, and no one wants that.
3) Spending a lot of time doing it all yourself
Let’s face it, bookkeeping can take a lot of time. However, professionals are not only quicker, but are more likely to do it without any errors. A good bookkeeper is worth their weight in gold come tax season. Fortunately, the internet allows us to screen bookkeepers more quickly and find ones which suit your budget. Take advantage of it so that you can focus on other parts of your business.
What activities you should be FOCUSED on
Any bookkeeping system has multiple components, and when everything is organized, it is a huge weight off your back.
Firstly, journals contain a record of all transactions. To make things easier down the line, it is worth adding a description to each transaction; especially if you sell a service. If you want to get even more organized, you can have different journals for different types of transactions, instead of lumping it all into one file.
Here is a selection of journals you should keep as part of your bookkeeping.
– Payroll
– Accounts payable
– Accounts receivable
– Cash disbursement
– Cash receipts
Secondly, financial statements are a vital part of your books. They give you and outside parties vital information about the financial standing of your business. Below are the documents you should have as part of your financial statements.
1) Balance sheet- Provides a historical view of a company’s financial standing. It includes liabilities, shareholder’s equity and assets.
2) Cash flow statement- Shows a change in cashflow over time.
3) Income statement- Exhibits a business’s net earnings over a particular period.
4) Owner’s equity- This document shows dividends paid to shareholders, net income (annual), and retained earnings (money in the bank).
How to spend LESS TIME doing your books
2) Go Mobile
This allows you to make updates while on the move; thereby saving you time. Your bookkeeping software most likely has a mobile application – download it. You don’t always have to use it… It’s just great to have access so that you can add anything on the spot without forgetting.
Also, if your bank has an app, make sure to download that as well. This allows you to keep a closer eye on your books, and rectify any errors quickly.
2) Create a Schedule
In order to make sure that your bookkeeping work responsibilities don’t pile up, create a bookkeeping schedule of daily, weekly, monthly, quarterly and yearly tasks. This will ensure that you are on top of it all, and can provide updated records. This strategy of having a set list of activities will surprise you when you realize how much time it saves you. Download the “ultimate accounting cheat sheet” for a complete checklist of a daily, weekly, monthly, quarterly and yearly accounting activities.
https://additionalinformation.leadpages.co/ultimate-accounting-cheetsheet/
How to find and fix accounting mistakes quickly
Mistakes will happen in business. Unlike errors which can easily be rectified with an apology email, making an error with your accounts can make you seem like a fraud. The government may think that you are trying to hide transactions, and a business deal could fall through because your documents appear deceptive.
Below are the most common accounting mistakes and how to fix each one:
1) Error of principle
This is when transactions are attributed wrongly. For instance, a loan which mistakenly gets classed as a transaction. This can be avoided by recording all incoming and outgoing cash in a clearly labeled table.
2) Error of omission
This occurs when a transaction isn’t recorded in your books. This might be because of a missing receipt or invoice. This can be avoided by keeping a digital reference of all transactions, and checking the number of transactions in your books for a given month, against the number of transactions in your digital vault for that same month.
How to create an effective plan for your bookkeeping
Like most things in business, organization and attention-to-detail can make a huge difference when it comes to handling your books. Here is the easy step-by-step system you should folder.
1) Have folders for different transaction types and financial documents. Label them by date and separate them by month.
2) Make a digital copy of all documents, and also label them by date, and separate them on a month-to-month basis. Also have an easily editable digital version of your books.
3) Set aside time each month to make sure that everything is crosschecked, recorded and filed appropriately.
4) When it is time for tax season, presenting your books for investment purposes and so forth, do a final check of all folders on a month to month basis.
Download the “ultimate accounting cheat sheet” to keep on top of all your tasks. By using this cheat sheet, your quarterly and yearly tasks will be 90% of the way done already.
In conclusion, I hope this piece on bookkeeping helps you to create an effective system for handling your books.
READ THIS NEXT: 4 TOOLS THAT MAKE TRACKING YOUR REAL ESTATE EXPENSES EASIER.
