As a small business owner, you may think that it’s a good idea to pursue your business degree online, and you’d be right. While it’s always a good idea to receive formal training in accounting, you don’t have to wait until you earn your degree to set up a proper bookkeeping system for your new company. Here are the top tips for small business owners establishing their system of accounting:
1.Keep It Simple
If you’ve ever heard of the acronym KISS, or keep it simple stupid, there’s never been a better time to put it into practice. When you’re first starting out, the best thing that you can do is to keep your record-keeping methods as simple as possible. The IRS isn’t going to be breathing down your neck for several more years, so use this time to learn from your mistakes. As your business grows, you can build upon your accounting methods if necessary.
While you’re still learning about business accounting and tax law, make sure that you keep everything organized. Keep all of your receipts, invoices and other paperwork clearly labeled and within reach. Instead of deciding what to keep and what to throw away, keep everything. It may seem like busy work, but once you file your taxes for the first time, you’ll have a better idea of what you really need and can re-organize yourself. You’re far better off to organize everything now and realize that you really didn’t need it than to find out later that you ran important documents through the shredder.
3.Use Two Methods
The first year of your business should be spent utilizing two methods of record keeping: paper and digital. Utilizing both methods will provide you with a system of checks and balances while giving you time to learn how to use the accounting software that you’ve chosen. Before you decide to stop using paper, make sure that your numbers are matching up. Keeping two sets of books will take some more time, but it can prove to be very helpful while you’re learning how to use your software.
4.Do it Daily
If you think that you don’t have time for daily record keeping, stop to think if you’ll have time to sit down and do 30 days’ worth of accounting at the end of the month. Sit down at the end of the day, every day, to make entries into your record books. Tracking your activity every day will help to ensure that you don’t skip anything important and, believe it or not, daily record keeping will save you time in the long run.
5.Box it Up
At the end of the year, you’ll want to box up all of your records, statements, checks, paid bills and other paperwork, along with a copy of your tax records. Clearly label your box and store it where it is easily accessible. Boxing up old records will not only keep your office organized and clutter-free, but it will allow you to pull anything that the IRS asks you for quickly. You can find storage boxes made for just this purpose at your local office supply store.
Keeping records for your small business doesn’t have to be difficult, though many owners make the mistake of over-complicating their bookkeeping. Follow the tips above and seek the advice of a professional if you need it. You’ll find that small business accounting isn’t as difficult as you assume it to be.
Amie Gottschalk is an avid education blogger. You can follow her on Twitter @amiegottschalk.