From the time of the abacus, people have been trying to track inflows and outflows. The more we grow as a society, the more the need for proper tracking increases. Beyond taxes and loans, there is importance laid upon good bookkeeping.
The problem with that is where to begin. Not everyone has been trained in the ways of the generally accepted accounting principles (GAAP) and not everyone needs to be. You are capable of handling bookkeeping even without a degree.
Professional Bookkeeping is as old as business itself, but the methods used to keep everything in order have greatly improved. There is no need to be hesitant to dive into the bookkeeping your company needs. Read on to find 6 bookkeeping tips for the modern world.
A large part of bookkeeping is tracking expenses and income. Though it is easy to keep the larger purchases in mind, sometimes the little expenditures get lost in the shuffle. For this reason, it is important to keep expense receipts for all things, big and small.
You may be dismayed to find you still need to keep receipts, but with a digital world, you can now keep digital receipts. There are options to avoid paper receipts all together, but having a digital copy emailed to you directly. Using this technology, you can be sure all of the things you are buying are being tracked in your records.
Another good idea for keeping things digital is to scan any paper copies that you do end up receiving. There is still the potential for lost copies between the purchase and the office but by scanning items into a shared network or a specific piece of software, you can be sure the information will be available to those who need it when they need it.
Receivables are the lifeblood of a company. So much so that there is an industry built around funding strategies that consist of selling receivables to get money in the door now. With the importance placed on receivables, it seems obvious to watch them closely, but occasionally they still slip between the cracks.
Along with the idea of digital receipts, digital tracking of your customers and their activity is a good way to stay up to date on cash flow. By populating invoices in a digital manner, whether that be through spreadsheet tracking or full-blown accounting software, you will have the ability to closely monitor each item due. Important items to track are outstanding invoices, days to pay for repeat customers, partial payments, credit limits for customers, and any credit balances due to customers that may offset their outstanding invoices.
Speaking of full-blown accounting software, it is highly recommended to utilize some kind of software solution for bookkeeping. This doesn’t have to be anything fancy, as there are many options available for any size of company. The most important piece of having software is the ability to track items that are incoming and outgoing, as well as populate reports based on the data that is entered.
When entering expenses and receivables into a software program, there is often no need for additional analysis, the software will do that for you. It is very useful to have snapshots of cash balances, inventory costs, profit margins, and so much more right at hand. By doing a small amount of research into the multiple products available, you are sure to find the perfect software to meet your bookkeeping needs.
Having your documents organized almost sounds like keeping receipts in tow and being sure receivables are watched, but there is so much more to it than that. Bookkeeping actually takes into account procedures for running the many facets of a business as well as just where the money is settling. It is helpful for the business in general to have a set of procedural documents, but it is also important for whoever handles your accounting.
On top of procedures, all documents that can be written off come tax time need to be stored and clearly labeled for when a new year comes around. This includes big purchases, depreciation, and information about business travel, such as mileage.
Again, it is suggested to keep these files digitally, as well as any hard copies that might be on hand. This duplication allows for originals to be sent to the proper entities while maintaining records in case of loss.
No matter who handles the financial data and who handles to day to day process of keeping the business afloat, it is important that everyone understands the financial reports. In reading financial data, everyone learns what parts of the company need to be worked on, which need to be continued, and sometimes which need to be let go. The difficulty in running a business can be lessened by effectively monitoring financial reports.
The main report to understand is the income statement. This report finalizes with the profit and loss of the company over a set period of time. By balancing revenue earned against the cost of goods sold and expenses, you get an accurate picture of what is happening within the business.
Another staple report is the balance sheet. This report tracks assets, liabilities, and equity. This report is a higher level, tracking the value of assets over their assumed life, the inventory on hand and the retained earnings over the life of the business. It is in this report that receivables and payables are tracked.
Do not hesitate to seek a professional when things are looking rough. There are accountants and bookkeepers trained for any type of assistance you might find yourself needing. You can hire these people for short term periods, to help set up or to do taxes, or for the long run as a standing part of your company.
Make sure to find the right fit for you. The person you work with needs to understand your business to provide you with the right analysis. Shop around and get just what you need.
The new world of digital assistance is here and it’s bringing bookkeeping into a new era. There is certainly a learning curve to software, digital storage, and networks, but the payoff is great. No matter your level of knowledge in the area, you are sure to find a solution that will work for you.
Begin by keeping good records. This applies to all things your business, procedures, receipts, receivables, and the financials will flow from there. Bookkeeping is an ancient business need, with modern business solutions.