Kristina's Bookkeeping Blog

Small Business Bookkeeping: 5 Steps to Staying Organized

Is an organized filing system the weak link in your business? It’s time to turn over a new leaf and update your organizational practices.

  1. Organize documents by date and client (if applicable) as they come in, on a daily or weekly basis, depending on the size of your business and whether or not your business has a dedicated bookkeeper.
  2. Whether you receive documents electronically or by mail (sometimes both), you need to have a filing system that works to keep things organized. There is nothing worse than frantically looking for the scrap of paper that you remember touching or seeing, but it has now mysteriously vanished. If a document is electronic, put it immediately in the appropriate folder on your computer and in the cloud (it is important to always have, and use, back up files). Have all physical mail delivered to an inbox, and go through it once per day. Make sure that you reserve enough time to file as you sort. Try to touch a piece of mail only one time. Open the mail, evaluate what needs to be done, and then file it in the appropriate place. It is when we set things down, intending to return later, that they most easily get lost.

  3. Use an easy to use and appropriate naming scheme for your files.
  4. There is nothing worse than spending productive hours searching for mislabeled files. Be clear about the names you choose for your files. Don’t just leave them as “new file.” Put the name of the client and the year that the file contains. Each year start a new file, for both physical and digital documents.

  5. Make a clear separation between business and personal finances.
  6. This is hard for small business, especially those that are home-based, but it is necessary for healthy, organized bookkeeping. It’s important to keep a clear separation between the finances. If you depend on funds from the business to keep your personal life afloat, pay yourself first. Write yourself a check or put yourself on the payroll, so you still have the money that you need, but there is a clear separation between business and personal finances. Have a credit card and bank account that you only use for business. Conversely, if you use your personal account for a business expense (emergencies happen), make sure to clearly document that as a business expense.

  7. Make sure you have clear categories and everything is where it should be!
  8. You don’t have to have a huge amount of categories in your accounting software, but they do have to be clear, and they have to make sense to whomever is doing your accounting and bookkeeping! You may have to consult with a bookkeeper or accountant to set up categories appropriate for your type of business. This is what is called a chart of accounts or COA. Many times, a COA is represented by numbers. They do represent real accounts though. Some examples would be:

    Asset Accounts: Different types of resources owned or controlled by the business (such as cash, real estate, inventory, accounts receivable).

    Liability Accounts: This represents what a business owes, or their financial obligations (such as loans, accounts payable, and rent or mortgage).

    Equity Accounts: This is the residual equity of a business (after deducting the liabilities from the Assets).

    Revenue Accounts: This represents the business’s gross earnings (income, sales, and interest on accounts).

    Expense Accounts: The outflow it costs to keep the business running (such as electricity, water, rental, insurance and taxes).

  9. Transfer files to a cloud/online server. This it makes it easier to collaborate and share files with your professional bookkeeper and accountant.
  10. Quickbooks Online, Xero, or hosted Quickbooks Desktop allow businesses to stay up to date with their bookkeeper and accountant. It’s also important to keep company documents updated and accessible. There’s a number of options for this, from the popular Dropbox, Google Drive, OneDrive, to high security services such as SpiderOak.

When I have to travel I have to be able to stay on top of my business. Keeping things organized in the cloud allows me to do this. Whether in the office or on the road, organization is the key!

If you need help getting your company’s books organized, contact us today!

Leave a Reply

Subscribe via Email