Keep an audit trail
An audit trail is nothing more than a record of all your invoices and checks in numeric order. The thing to remember is never skip numbers. Record voided checks and invoice numbers in numeric order with all other checks and invoices, only denote each one that is “voided”. This assures there will be no gaps in your numerical sequence and leaves a proper audit trail.
Always keep all your receipts, no matter how small the amount and make sure they are legible. Receipts you must keep include debit receipts and credit card receipts.
Consistency is essential to successful business bookkeeping. If you use manual bookkeeping system, the double entry system is the best system to use. Always be sure to head your columns the same way each month throughout the year. This small matter of consistency will save you and your accountant time and aggravation.
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 are not 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.
How do you handle your bank deposits? One easy way is to record your daily deposit in a deposit book. Generally, these books come with a white (original) copy, yellow (duplicate) and pink copy for triplicate. 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. You should always provide a copy of all deposit slips to your bookkeeper.
Get into the habit of depositing all cash immediately at the bank once it is received. All deposits must match your Sales.
Bank Account Statements
When opening a business checking account, you should request a statement and cancelled cheques with a month-end cut-off date. This will save you time when reconcilling your records with the bank statement every month. The closer the cut-off date to the month end, the fewer checks you will need to record as outstanding.
And don’t toss those bank statements and canceled checks into a filing cabinet without reviewing them. Resist the urge to do this! As soon as your statement arrives, review it before anyone else sees it, including your bookkeeper or employees. That way you can catch unauthorized checks. You should always reconcile your bank statement either manually or computerized.
Petty Cash Box
Almost all small business make small cash purchases. You may want to set up a Petty Cash Box to keep control of those purchases. Get yourself a metal cash box and put in currency and coin that totals $100.00, for example.. This will be your starting point. The value of this box should remain at $100.00 at all times. Perhaps you or your employee purchases a notebook at the local office supply store for $5.00, using money from the Petty Cash Box. When you get back to the office you will put your receipt in th box. Now you should have $95.00 in currency and one receipts for $5.00. The value of your box is still $100.00. You can continue using the Petty Cash Box until you run out of cash. Then replenish the box by writing a check for “Cash”, expensing all the receipts, and cashing the check at the bank. After you cash the check, the new currency and coin go into the Petty Cash Box, so you’ll be starting again with $100.00 in the box.
Storage Boxes for Each New Year
Keep all your records for one year in one box. You can put a copy of your tax return, bank account statements with cancelled checks, receipts, financial statements from your accountant/bookkeeper, your paid bills and all other backup for that year in one box. Label it with the year and contents on the outside of the box. Then store it somewhere accessible.
Filing Paid Invoices
Start new file folders at the beginning of each year for all your paid invoices and paid bills. It’s not necessary to start a folder for each customer or vendor unless you do a large volume of business with that customer. You could get by with a folder for all customers from A-C, D-F, and so on.
If your books are computerized always print 2 copies of invoices one for your books, one for your client. Computerized invoices can be customized to suit your business. If you decide to print invoices with a perforated edge so customers can tear off one portion and return it with their payment, be sure to print your name and “remit to” address on both sides of the perforation.
From Paper System to Computer Program
The best time to go from a paper bookkeeping system to a computerized system is right after you completed a Year End using the accountants Year End Trial Balance.
Always keep your business finances separate from your personal finances. Don’t give the tax auditor a reason to audit both.
File all your tax compliance reports on time to avoid penalties, even if you can’t pay the amount owing
Keep organized by
- developing a method for handling all your paperwork;
- entering your bookkeeping data in batches; and
- reviewing your bank statement and financial reports monthly.
Keep track of what you spend
Keep and sort your receipts for purchases. Create some type of system to sort receipts–date and function are two options–so you can find receipts if needed. You may seperate these receipts into accounts to keep track of income and expenses for particular customers or projects. Record these receipts in your ledger–on paper or computer, so you have a running total of your expenses.