For some businesses, accounting and bookkeeping are some of the most challenging daily tasks. Your focus is on business, and watching or working the numbers can often feel overwhelming and complicated, right? Even with the challenges, the need for good accounting practices is something you cannot ignore. You need effective processes to ensure your business continues to run in a financially sound way and can monitor and track transactions appropriately.
Don’t let the idea of bookkeeping scare you away. You can certainly hire an accounting and bookkeeping service to help you. You can also utilize these simple strategies to improve your processes and your practices in-house.
Technology Is for Your Benefit for Accounting and Bookkeeping
Most companies have begun to embrace technology, but you would be surprised at how many are scared to do so. In some cases, it’s just because they aren’t sure where to start. With others, it’s because they fear the change of shifting to digital what their paper system has done so well through the decades.
There are some really great accounting technologies and programs out there. You can turn to programs like QuickBooks, FreshBooks, and other useful software. Every business will have different preferences when it comes to incorporating software, so take the time to research what you feel will best meet your needs.
This technology is meant to make your life easier. It’s a digital place to enter transactions, payments, invoices, and more. It can help simplify and streamline many of your tasks, manage and reduce errors, and grant you real-time financial data. If you have been holding out on technology, it’s time to embrace the possibilities.
Implement a Chart of Accounts
One of the best ways to categorize expenses and income is through a chart of accounts. These accounts are customized to your business needs, so you can create whatever works for you. This chart doesn’t necessarily mean you have a separate bank account for each category. Instead, it refers to categorizations through accounts so you can input income and expenses appropriately.
For example, you might have an account that is for building utilities, an account for invoice income, and other designations that your business needs. When you enter a transaction, it should be clear where that transaction would fall. A chart of accounts is all about organization for your bookkeeping.
You don’t want to do anything random here. It needs to be clear and logical so that anyone who enters or applies something to an account can easily pinpoint where. You will find that a well-structured chart of accounts will improve record-keeping, simplify reporting, and keep tracking more consistent.
Incorporate Regular Reconciliation Practices
How often are your transactions reconciled? Does anyone review those reconciliations to ensure they are in agreement? Generally speaking, you should reconcile accounts at least once a month. This reconciliation should include bank statements, financial accounts, credit cards, and any other applicable accounts.
Part of reconciliation is to match receipts to reported transactions. This is for both accountability and accuracy. In all actuality, someone who doesn’t enter all of the transactions should reconcile or at least review reconciliations. There should be more than one set of eyes on the process. This way, there is accountability for transactions and a better likelihood of catching any mistakes quickly.
Implement and Follow a Budget
Creating a budget in a business environment can be very challenging, but it is also essential. Budgeting is meant to help you plan your finances and ensure you are on track. It helps bring accountability to spending and helps you plan for exceptional expenses as well.
When you create a budget, you can better plan and monitor or even learn where you need to improve with spending habits. Your budget can change and adjust based on the needs of the business and the industry, but it’s a great starting place.
Create a budget and track where you are against that budget on a regular basis.
Train and Educate Your Team
When it comes to bookkeeping and accounting, you need to have a team that can back the necessary practices. Whether you take care of bookkeeping in-house or hire a firm to help out, your team still plays an important role in ensuring everything is input correctly.
While your everyday team members and employees probably won’t be entering or tracking, they still need to be accountable for following the rules and ensuring proper documentation is turned in quickly. Their cooperation with your bookkeeping services is critical to ensuring everything is accurate and tracked correctly.
Know the Regulations and Be Compliant
Every business and every industry has its unique set of regulations when it comes to finances. For example, a financial institution will have different bookkeeping requirements than a local restaurant. While there are different requirements and needs, both still need bookkeeping.
Be familiar with the regulations that apply to your business so that you can ensure things are done properly. Don’t be afraid to consult with a professional who can help ensure you are compliant and navigate any challenges you may have as well.
Stay Compliant with Regulations
Tax laws and accounting regulations are constantly evolving. Staying informed and compliant with these changes is crucial to avoid penalties and ensure the financial stability of your business. Consider consulting with a tax professional or hiring an accountant to navigate complex tax codes effectively.
Get Help with Accounting and Bookkeeping from Us!
There is a lot that goes into everyday needs for bookkeeping practices. But you don’t have to figure it all out on your own. At Katherine M. Johnson, CPA, we provide personal and business services to help you with your bookkeeping needs.
Incorporate these strategies into your processes to see improved differences with internal tracking and accounting. Your financial stability counts on it!
Contact us today for a free consultation for bookkeeping and accounting services. Let us help you with your financial needs.
Recent Comments