WHY GOOD BOOKKEEPING?

It's the NEW YEAR and it's the perfect time to get your personal or your business's finances in order. Whether you do your own bookkeeping, or you have a hired bookkeeper, why is it important to have good bookkeeping?
  1. Mandated Reporting & Compliance
  2. Budgeting & Forecasting
  3. Loss and Waste Control
  4. Collections
  5. Helps you to determine when/if you need employees or more employees
  6. The ability to see the BIG picture -- Know when to expande, when to hold steady or downsize
  7. Provides the ability to demonstrate performance to future investors or lenders
What constitutes good bookkeeping? Where can you start? How can you make sure you're on the right track? Here are some quick tips:
  • Open a dedicated business checking account
  • Do NOT co-mingle funds --Spend only from the business account for business expenses; deposit business receipts only into that account; NEVER deposit directly into your personal bank accounts
  • Keep ALL receipts
  • If you must make purchases from personal funds, submit the receipts for reimbursement so the company will have a record of the expense
  • IF you are not able to control petty cash purchasing, get an ATM card attached to an independent business checking account, or if you have to the business checking account. When making petty cash purchases, use the ATM card so you will have receipts, a record from your bank statement of the purchases, and control of cash purchases. I prefer to have a dedicated checking account and then transfer funds from operating account to Petty Cash checking acct as needed. This is especially important if the person(s) spending are not kept aware of the funds in the bank account. Many times a partner will use the company ATM card for personal expenses. This is a great way to monitor spending.
  • Be aware of the state and federal rules that govern your company's entity type 0 sole proprietor, S-corp, C-corp or LLC.
  • When considering adding employees, understand the TRUE cost of employees and your obligations for timely tax remittals as the employer
  • Employee taxes and sales taxes are not your money --these funds should never be encorporated into your operating capital or counted on for operating.
Check back for more on the topic of good, efficient, bookkeeping! These are important ideas to be aware of and be familiar with!

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