Eight Bookkeeping Tips for New Businesses

POSTED: 03.08.2010

1. Keep Good Records

Many business owners don’t keep good records. Some don’t understand bookkeeping;
others understand it, but may be afraid of what the numbers might tell them.
Think of it this way–bookkeeping is the glue that keeps your business together.
If your records aren’t in good shape, the business could fall apart. A healthy
business is monitored through its records on a regular basis so you can find
problems and correct them before it’s too late.

This is one of the most basic rules:

If you don’t keep accurate daily records, you don’t have an accurate way to track the financial condition of your business. Different people use different record-keeping systems; what matters is that you have one and use it every day. Once you have a good system set up, accurate record keeping will take just a few minutes a day.

2. Deposit Ticket Books

How do you handle your bank deposits? One easy way is to record your daily deposit in a deposit ticket book. Generally, these books come with a white (original) copy and yellow (duplicate) copy in books of 50. For a small business, an order of 200 duplicate deposit tickets could last 2 years unless you make deposits everyday. As you write each deposit ticket, it is a good idea to remove the white copy to give to the bank and leave the duplicate (yellow) in the book. That way nothing gets lost.

3. Use the right accounting system.

Most businesses use either cash-based or accrual-based accounting. If you use the cash method, you count income when you receive it and expenses when you pay them. Under the accrual method, you count income and expenses when they happen, not when you actually receive or pay them.

In practical terms, this difference in timing is relevant if your company keeps inventory on hand or handles transactions on credit. In these cases, the accrual method might be a better choice for your business. And in fact, if your firm has more than $5 million in sales or keeps an inventory, the IRS might require that you use the accrual system. In other cases, however, the simpler cash system could be all you need.

4. Don’t over-categorize

Most of us tend to make things harder than they need to be. Don’t need separate categories for paper, pencils, printer cartridges, etc. All these items can simply be listed under “office supplies”

5. Handle and review checks carefully.

It’s easy to be on autopilot when you’re writing checks and tossing canceled ones into a filing cabinet without reviewing them. Remember: Those checks are as good as cash. And if something goes wrong, you — not the bank — will be on the hook.

Take the same care with checks as you would with cash. Sign checks using a clear, distinctive signature that won’t invite forgery.

6. You Are Tax on Profits

Many think they are taxed on all the money they take out of their business. Sole Proprietors taxed on the profits of the business, not the revenue. Estimated income tax payments should be based on profits.

7. Start at the End

Determine expense categories by looking at tax return you will file. If you file a Schedule C, get a copy of a blank Schedule C write down all the categories that apply to your business. Include those categories when you set up your bookkeeping system.

You can review the attached Schedule C.

8. Auto Expense

Keep a log in your car & always write down your start mileage & where you’re going. This will really help at tax time. Note: if you forget, mapquest.com is an excellent resource to calculate mileage.
Free Accounting Software
Intuit QuickBooks Simple Start Free Edition 2010

The FREE bookkeeping software solution for small businesses that want the basics. It’s so easy to use, it will give you back your time so you can easily stay on top of your business. You’ll spend more time growing your business and making money, not bookkeeping.

* Track sales & expenses for up to 20 customers
* Instantly create invoices, pay bills, & print checks
* Organize your finances in one place, tax ready

Just go to this website and download your free accounting software.

http://quickbooks.intuit.com/product/accounting-software/free-accounting-software.jsp

I would like to wish everyone success on their new Business.

If you have any questions in regards to your bookkeeping needs,

I will be more than happy to answer them.