New business owners need a little extra help setting up and maintaining their books. Chances are the main reason they think they should keep good books is for taxes. These are the business owners that need a little more help to see how good bookkeeping help you with more than taxes.
Most likely you don’t have an accounting or bookkeeping background and may not be familiar with the software for bookkeeping like Quickbooks. This often drives small business owners to want to hire a bookkeeper, but don’t want to spend a lot of money per hour to keep their books. So, many small business owners do their own books.
Here are some guides to help you get the most out of your bookkeeping.
1 Keep It Simple Stupid (K.I.S.S)
Remember that you are not an accountant or bookkeeper. Things that come easily to someone with years of education in accounting will take you time to learn. Don’t worry about getting everything perfect when you are starting out, just get the basics.
2 Get The Appropriate Software
Starting a new business will be challenging and the budget will be tight. You may be tempted to use cheap software to get by, but don’t skimp on your books.
- It’s hard to find good bookkeeping software that is free or cheap
- Free software has bugs that will hurt you more than help you or lack features
- Free software often causes you to have double entry
- When you get ready to upgrade, you have to start over with free software
One of the best software solutions on the market today is Quickbooks. They have been a proven leader in bookkeeping for years and make it easy to use online.
3 Get A Chart Of Accounts
If you don’t know what a chart of accounts is, get one here. Create a simple chart of accounts that will proved you with enough detail to produce good reports, but not so much that you get bogged down with details. Reach out to your local bookkeeper to help you get setup and resist the urge to add accounts on the fly before you talk to your bookkeeper.
4 Journal Entries
Resist the urge to put things in through journal entries. Everything you need to do in Quickbooks should be done through an estimate, sales, receipt, and deposit. Once you get used to that process, you shouldn’t have to do a journal entry.
5 Checks and Balances
If you are the bookkeeper for the company, sit down with the owner and explain the benefit of checks and balances. One of the most important is the bookkeeper should not be the person in charge of paying the bills and access to the bank account. You should have two people, one to pay the bills and one to manage the books. This will reduce the chance of fraud or embezzlement.
6 Reporting is Important
Reports may look ominous, but they really are your friend. Reports help you to understand if your books are in good shape. P&L (profit and loss) will show you how much you are spending versus how much you are making. It’s a good indicator to show you if you are growing, making money or losing money.