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Getting Your Bookkeeping in Order
By The BIDaWIZ Team - October 7, 2009
If you recently launched a business and haven't gotten around to bookkeeping or have been in business for awhile but lack a proper bookkeeping system, you'll want to listen in to what we have to say.
Proper Bookkeeping Is Essential
Having a proper bookkeeping system is needed for BOTH tax purposes & for understanding the key financial & business trends impacting your business. For instance, most retail businesses should have detailed electronic customer/supplier data by product, region, & date to better understand sales patterns, inventory builds, and how to run an overall efficient business. It is possible that sales could decline in a specific region due to competition and you would want to know that information as soon as possible in order to reduce purchases and prevent an inventory build.
How To Get Your Books in Order
Keeping Supporting Documentation is a MUST
Keeping supporting documentation, whether paper or electronic, for all gross receipts, purchases, expenses, and payroll receipts is a MUST. The supporting documentation should be stored in a safe and readily accessible place. Even if your general ledgers are not in order now, you will at the very least want to have access to supporting documentation to fix any mistakes that become known. Start searching for all of those receipts now.
Evaluate Bookkeeping & Invoicing Products
If you are a small business owner with limited bandwidth, chances are that you will want to implement a bookkeeping system that is as easy & user-friendly as possible. But, make sure you think about your specific business needs as you may not need the most robust bookkeeping software that is available. Specifically, if most of the business transactions are similar in nature and the business is local, a basic bookkeeping software is probably sufficient. Outright is a free web-based bookkeeping application that is gaining popularity of late. They have released several new features such as integration with an invoicing application, Freshbooks. Quickbooks remains a staple in bookkeeping software for small businesses, but it is not free -- a couple hundred bucks, depending on the edition.
Consult with an Accounting Professional
This is time & money well spent, especially if you are not sure which bookkeeping software to implement. These professionals can foresee potential accounting issues that you may not realize at first. For instance, a growing retail business might not realize the importance of selecting a bookkeeping software that allows the bookkeepers to properly & easily record state sales taxes.
Integration of A Merchant Bank Account
Also, make sure that whichever bookkeeping software you choose to implement, you can easily reconcile/export data from your bank account & compare to your actual books. A lot of businesses get lazy with this, but it is quite possible that several mistakes will be avoided by having this functionality & actually reconciling.
Developing a Clear Audit Trail
Make sure that you can easily trace an audit trail from the receipt of the transaction all the way to the general ledgers & financial statements. If possible, you would like to have this trail automated so that you can easily identify an issue with a transaction, should one come up.
Implementation of Controls
Your business may be small today, but in a few months or years that can change. So even if you are a one man or woman shop, you still will want to put together a bookkeeping system that supports effective internal controls in the future. What do we mean by that? Well, in the future you may need to have the ability to limit user access to certain areas of your bookkeeping system. A sales associate may need access to the computer system to maintain a log of transactions but that doesn't mean they should be booking the receipts or have access to booking the receipts. Segregation of duties is very important.
More Bookkeeping Questions?
If you have additional questions, our Bookkeeping Wizards are Here to assist.
Have Comments? Write to comments@BIDaWIZ.com
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