Good Bookkeeping Habits

As a business owner, it’s essential to create a system for organizing your bookkeeping tasks. A dedicated system will make it easy to find receipts and keep you up to date, so you don’t have to scramble when tax season comes around.

As you get a good handle on where your funds are coming from and where they’re going, you’ll also gain valuable insight into your company’s financial health.

One thing you can do right now to improve the way you handle your books is to create a set of simple bookkeeping checklists. These lists will give you a quick, reliable way to streamline basic financial tasks throughout the year.

What Is Bookkeeping?

Before we dive in, let’s take a quick look at what we mean when we talk about bookkeeping.

Bookkeeping refers to the process of organizing and recording financial transactions for a business. It’s crucial to have good bookkeeping practices in place because this is the primary way to determine if your business is profitable — and it’s also vital for making sure you have accurate and complete information for income tax preparation.

At the most basic level, bookkeeping is simply “keeping an eye on your numbers.” When you have a good sense of where you stand, you can make informed decisions about your business’s future. You can also address financial challenges early — before they grow into big problems.

Bookkeeping tasks include:

  • Recording all business transactions.
  • Sending invoices to customers.
  • Making payments to vendors.
  • Managing bank accounts.
  • Payroll preparation.
  • Preparing financial statements and reports.

Sometimes, you’ll see the terms “accounting” and “bookkeeping” used interchangeably. Bookkeeping is similar to accounting, but accounting typically refers to the process of analyzing the data collected through bookkeeping tasks.

What to Include on a Bookkeeping Checklist

Each day, you should:

  1. Refresh your financial data. Sync your bank and credit card feeds, sales data from your POS system, and any other automated financial transactions. Most accounting software will sync automatically.
  2. Reconcile cash against receipts. This allows you to discover shortages and overages right away.
  3. Record transactions — For example, invoices you send and payments you make to vendors. Keeping up on this daily makes it less cumbersome when you get to the end of the month. Again, a good accounting software program will do this task for you.
  4. Record any payments and deposit cash and checks. You’ll save a lot of time and hassle if you use a business bank account with mobile deposit features.
  5. Record any inventory you receive.
  6. Back-up your data.

Some businesses also choose to manage their accounts receivable (invoices) and accounts payable (bills) on a daily basis.

Weekly Bookkeeping Checklist

Each week, you should:

  1. Send invoices and reminders for past-due invoices.
  2. Pay outstanding bills due before the coming week.
  3. Review projected cash flow and consider making pricing adjustments.
  4. If you have perishable inventory, take a look at inventory that needs to sell quickly and consider price reductions.
  5. Process payroll according to your payroll schedule (weekly, biweekly, etc.)

Monthly Bookkeeping Checklist

Once per month:

  1. Reconcile your bank accounts. Check for any discrepancies between what you think you should have and what your financial account balances show.
  2. Review past-due invoices and send reminders.
  3. Check inventory carefully and place orders.
  4. Prepare monthly payroll tax forms and make payroll tax payments that are due.
  5. Review actual profits against projections from prior months, quarters, and years.

Quarterly Bookkeeping Checklist

Every three months:

  1. Calculate a new profit and loss statement.
  2. Prepare quarterly payroll forms and make quarterly tax payments.
  3. Review sales tax and remit payments — this may have to be done monthly, depending on your state’s filing frequency.
  4. Contact your tax preparer to review your income tax situation. Quarterly estimated tax payments may be due.

Annual Bookkeeping Checklist

At the end of the year:

  1. Review any past-due receivables (invoices) and follow up with reminders.
  2. Thoroughly evaluate your inventory (perform a physical inventory count).
  3. Complete W-2 and 1099 paperwork, any other payroll forms that are due annually, and issue statements to employees and contractors.
  4. Contact your tax preparer to file your annual tax return.

Don’t Let Bookkeeping Tasks Overwhelm You

As a business owner, you do it all. Chances are, you run your day-to-day operations, handle marketing, manage client relations, and keep up with finances. As your business grows and gets busier, it’s crucial not to let anything fall through the cracks — this is especially true for bookkeeping.

If you need some help, the good news is that you have several options for turning over your bookkeeping duties:

  • Hire an in-house bookkeeper.
  • Invest in a good bookkeeping or accounting software program.
  • Partner with a third-party bookkeeping service.

Each of these options will require you to make a financial investment, but the tradeoffs — less stress and improved efficiency — are worthwhile.

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