Bills, receipts, invoices, ledgers, financial reports, spreadsheets, journals—phew! The list of financial documents and records that every business, big or small, must maintain and store safely is so long that it is often hard to know where to begin! Managing hundreds of papers and files, both physical and digital, is a Herculean task that requires patience, meticulousness, and concentration.
Such bookkeeping activities can be incredibly challenging for a small business owner who runs a one-man show with no dedicated team assigned to the job. But the real question is, how does one organize such a quantity and variety of data and documentation so that it is readily available and accessible when required?
Tips To Organize Bookkeeping Systems
Here are five tips to help you set up your bookkeeping systems so that you don’t misplace or lose any of your important business data.
Separate Personal and Business Accounts
This is a crucial step every small business owner must take from the beginning. Many small business owners operate personal and business transactions from a single account. At first, opening a separate account for the business might look like an added cost. But as things progress, keeping accounts of transactions for business and personal becomes increasingly tricky. From an ease of accounting, bookkeeping and even taxation perspective, keeping your personal and business accounts separate from Day 1 is very important.
Optimize with Technology
Gone are the days of piling heavy ledgers and box files for all your documentation! We are now in the digital age with various software and applications available to manage business records digitally. Many apps offer bookkeeping services – including compiling spreadsheets and tracking invoices and payments – and integrated services that can link your business records to your bank accounts and other financial records. By carefully choosing affordable software that takes care of your specific accounting and bookkeeping needs, you can save loads of space, paper and stress (of losing important papers). It also makes looking for any data much quicker and easier. Moreover, you can create a backup of all the data and store it securely with the latest encryption technology. Having all your financial data organized and streamlined in a digital format and stored securely on the cloud also makes it easier to update it regularly, thus minimizing input errors in record-keeping and accounting.
Be Regular
Consistency and regularity is essential when recording business transactions or sending invoices. Running your own business needs a great deal of your attention and time in various departments and for different problems. However, it is crucial to take the time to make sure your financial records are being recorded and updated regularly, without fail. Putting off data-entry work for later can lead to gaps in your business books as you might forget specific details later. While such lapses might not be too serious, they can snowball into a bigger problem and become frustrating during tax season or an audit in the future.
Reconcile and Review
If updating your books of accounts is of utmost importance, so is reviewing them regularly. This is especially necessary when the job is delegated to somebody else. Although you may trust your employees implicitly, they can also make involuntary errors. By regularly monitoring and reviewing your files and figures, you can identify any gaps or errors early on and take the necessary steps to resolve them. Reconciling all financial records with your bank statements can help you ensure there are no mistakes, mismatches or potential frauds in the books.
Audits Help
While all the above actions can be done internally, having an unbiased third party look at your records can also be a great way of ensuring your business systems are operating smoothly and without gaps. An external audit can help bring a fresh approach and perspective, which, in turn, can help uncover any anomalies in your business books. External auditors can also offer valuable insights and guidance on improving your organization and bookkeeping operations using the latest tools available.
Compiling, organizing and storing business records sounds like a tedious job. However, it is undoubtedly one of the pillars of the success of a small business. Without a sound bookkeeping system, it becomes challenging to handle taxes and compliance, and the foundation of your future growth prospects could be in danger. A streamlined bookkeeping system can help you analyze and process data better, thus making it easier for you to make informed decisions and plan the course of your small business journey.
Contact Ford Keast LLP in London to Help You Organize Your Books
Talk to a professional accountant to help you set up a bookkeeping system with the latest software and record and store documents the way the CRA prefers. To learn how Ford Keast LLP can provide you with the best accounting and bookkeeping expertise, contact us online or at 519-679-9330.
