Four tips for DYI bookkeeping

Posted by Tim Ruben on November 19, 2012 at 3:22 pm

Paperwork: it?s the foundation of business. Whether you?re a doctor or landscaper, it?s important to keep track of your business?s money transactions. For this reason, most accounting Encinitas experts recommend outsourcing your company?s bookkeeping operations to a professional firm.

Yes, many business owners may insist on keeping your own books, but sometimes the lack of expertise can result in improperly recorded data and wasted time and money. Good accounting takes practice and perfection. If you really want to brave the auditors and are a do-it-yourself business owner the following tips may help you become more self-sufficient and accurate in that all-important paperwork.

• Stay on track with expenses: A credit card that you use solely for business can be a basic accounting system. Most credit card companies present you with statements that categorize expenses so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you?re less likely to pay cash and lose the receipts, forfeiting tax-time write-offs.

• Make a chart of client accounts: Making a chart of accounts is one of the fundamental steps in developing a business accounting system.? Employing such a chart of accounts allows a business owner to categorize funds that are received, retained, invested, or paid. The chart should be detailed enough so you can easily track client transactions, but not so complicated that you find yourself wasting large amounts of time on filling small details.

• Never forget taxes: Throughout the year, all business owners should put a portion of their money aside to pay taxes. All tax deadlines should be highlighted on a calendar, along with prep time, if necessary, to ensure payments are made on time. According to bookkeeping Encinitas experts, payroll taxes that go unpaid can be especially problematic. A common mistake many business owners make to get through periods where funds are low is they dip into employee withholdings that they should have sent to the IRS. Don?t do this!

• Keep a Clear Audit Trail: Maintaining a easy-to-follow trail of business transactions is crucial for passing audits on your business. The most effective way to document transactions is to create an electronic copy of all business receipts and invoices by scanning them into a computer. This information should be backed-up on a hard-drive to ensure the documents are available if the company is audited.

Following these four tips should help business owners get on top of their books and pass most tests presented by auditors and the IRS. Good luck and, remember, keep your records straight!

Source: http://www.modernlegalmarketing.com/four-tips-for-dyi-bookkeeping-1112-628/

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