Organization!! Done. - The secret is revealed. This is the key for excellent bookkeeping work. If you have just started your business, keep in mind how vital it is for your business to be organized. While this applies to all your business areas, we will be talking specifically about the bookkeeping work that needs to be done so that your business can flow.
So here are the two most important pieces of advice that we can give you and your bookkeepers:
- Plan your day ahead: at the end of every day write down the six most important things that you need to do the next day. Then, stick to it. Start your next day by looking at that list and executing all the items on it.
- Start entering your financial data right from Day One of your business. Having all your business financial data entered on your accounting system on time, from the very beginning, will allow you to:
- Save time – by knowing where the information is when you need it;
- Save money - on accounting fees, avoiding CRA late fees and taking advantage of vendors’ discounts;
- Make the right decisions - by having accurate and updated financial information;
- Avoid stress – when important due dates and audits come.
If you don’t have the time or the ability to manage your books, find someone who does. You can hire someone permanently for that. However, for most of the small businesses, contracting a bookkeeping service may be the best thing to do. Not only you will save money on payroll and benefits, but most importantly, you will have the advice of experienced professionals who will be able to guide you through the sea of tax compliance procedures and financial paperwork, if you need. Moreover, bookkeeping is a deductible expense. If your business has been running for a while and your books are far behind, act now! The later you take action, the more time consuming and expensive it will be for you to put everything where it should be.
Procedures (the way you do things) and routines (when you do it) are the two keys for an organized and successful bookkeeping work. Many of the systems you need to put in place consist of very simple actions that can make a huge impact on how smoothly your daily business activity runs. Here are some examples:
- Handle a piece of paper once in each step, if possible.
- File all papers immediately when you receive it and then again after you post it to avoid paper jams on your desk. Do your filing always the same way so you will always know where to find what you need. Keep your paperwork under control before it becomes overwhelming. How you chose to file and store your documents is an important step to get organized. Decide what you need to keep and how to file it so that you can access it very quickly when you need it. Some paper documents don’t need to be kept when you are using an electronic accounting system. However, you need to always make sure to keep safe and reliable backups of your electronic files, and you still need to keep paper backup information for audits.
- Create a routine so that you can batch your data entry. It will save you a lot of time if you collect it all to enter it in one sitting (daily, weekly or monthly, depending on how busy your business is).
- Stamp invoices as “posted” after posting them on your system, so that you don’t enter the same information twice and the same way, stamp it as “paid” when a cheque is issued for that invoice.
- Make sure to enter all the expenses into your accounting system, no matter how small the amount is, to ensure you get all legitimate tax deductions, saving money on your taxes.
- Create routines for your cash deposits. After cash receipt, make the bank deposit as soon as possible and make sure the amount matches all the cash received so that your bank reconciliation is easy and fast to do.
- Write down on your calendar the important due dates (when taxes are due, for example) but also the due dates to make a payment to vendors to take advantage of discounts. Watch cash flow reports closely and set up a system to review those due dates for enough ahead to set money aside to make the payment on time.
These are only some of the necessary steps to have organized bookkeeping work. For the sake of your business health, consider contracting professional help if you feel that you won’t be able to deal efficiently with it all by yourself.