Accounting or bookkeeping plays an essential role in a business record. However, it is not an easy task. The most basic accounting mistakes made by many small businesses are the easiest to correct. The following are five fundamental bookkeeping tips for your business.
Apply Accounting System
If you’re applying the cash-based method, then you’re accounting your income as you earn it and your costs when you spend them. On the other hand, if you use the accrual-based method, count your income and expenses when they occur, not when you receive or pay them. Hence, it is recommended to report your business income by applying the accrual system.
Keep a Daily Record
If you do not have an accurate daily log, you do not have a system for tracking your tax status. Numerous small companies employ various approaches to keep records. The most important thing is that you have a wonderful accounting system that you also use every day. If you set up an accurate record system, it will only take a few minutes a day to update it.
Additionally, you can instantly and efficiently track your company’s tax activities using an excellent accounting system. This way includes keeping separate bank accounts for your personal and business finances. Moreover, it can improve a valuable audit trail. By leaving a good audit trail, you can rebuild your company’s finances from the last transactions, if necessary, in a year or more.
Examine the Checks Carefully
Checks are similar to cash, so if something goes wrong, you will be slandered – not your creditor. Make sure you pay the same attention with checks as with money. Regularly mark your bills with a clear and different banknote so as not to favor forgers. Always examine your statements before anyone else (including your accountant and your employees). In this way, you will be more vulnerable to the cheques you carry with you. If your company is involved in a partnership, it’s a good idea to have all the checks checked by at least one of these partners.
Obtain Bank Statements with Month-End Cut-Off
Coordinating your bank statement with your additional monthly records will probably make it much easier for you to reconcile your bank statements and monitor your expenses.This understanding will be valuable for your future financial planning.
Apply Bookkeeping Software
Softwares play an essential role in business. These apps will facilitate tracking your income and expenses, the organization of your tax records, the consolidation of your company’s financial tasks, and the backup of all your files for safekeeping. If you use a retail product, make sure you know how to use computers and its spreadsheets.