Having a plan of action for your financials is a key factor in having a strong business. Solid bookkeeping gives you a clear understanding of where your business is at financially and what opportunities you have to keep moving forward. Unfortunately, many small business owners struggle to nail down a bookkeeping system—sometimes for years.

We know it can be overwhelming, so in this article, we want to break down an approach to bookkeeping that is easy to follow and understand, so you can get your financials in order.

The most important thing to understand is that you need a bookkeeping system. But the second most important thing is that your system needs to fit your business. No two businesses are alike, and your financial records will reflect that.

What is Bookkeeping and Why Should I Bother?

What is bookkeeping actually? Bookkeeping is the ongoing process of recording daily financial transactions. In other words, every day there’s money coming in and money going out—you’re making purchases, taking payments, etc. Those are transactions. Bookkeeping is keeping track of all your transactions. Simple, right?

Why should you bother with bookkeeping? Because your business depends on it, that’s why! Bookkeeping is what enables you to know where your business is at so you can build a firm financial foundation. Having accurate books is the basis for creating a budget, being ready for tax season, and even helps protect your business from fraud.

Bookkeeping is also crucial for planning for the future. Understanding where your business has been financially in the past not only helps you know where you are today, but it’s also the key to strategizing and planning for the future. 

With that out of the way, let’s get into developing a basic bookkeeping system.

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Two Steps to a Basic Bookkeeping System

When you begin your journey to having organized financials, step 1 is deciding how you will record your accounts. Will you create a spreadsheet? Stuff all your receipts in a shoebox? Write everything down on napkins? Thankfully, with today’s technology, those don’t need to be options for you (and they shouldn’t be, by the way).

At JR Bookkeeping, we recommend using QuickBooks Online®. There’s a reason QBO is the #1 accounting software in the world—plus you can get 40% off a subscription when you sign up through us. Nothing can help optimize your bookkeeping process like having the right software.

Here are some of the benefits of using QBO:

  • You have the ability to access it on multiple devices. Previously, with QuickBooks Desktop, you were tied down to one computer for bookkeeping. No more! With QBO, you can give yourself the freedom to access your books anywhere.
  • The ability to share data. You are able to access QBO on multiple devices, AND the data is available and updated when it’s accessed!
  • No need to back up data. You have your information stored online, so you won’t need to worry about one device holding all of your data and possibly crashing. All of your data can be automatically backed up and accessed from other devices, so you can have one less thing to worry about.
  • Save money with plans for every budget. QBO offers four great plans that start as low as $15/month, so you can pick the plan that’s right for your business. And did we mention you can get 40% off when you sign up through us?

If you are looking for a simple, cost-effective solution with in-depth tools to master your books, you won’t find a better option than QBO.

2. Create Daily, Weekly, Monthly, Quarterly, and Annual Checklists

Having a clear, concise bookkeeping system will keep you organized and on-track financially. We recommend a simple system with key tasks to be executed daily, weekly, monthly, quarterly, and annually.

Here’s an example of what that might look like:

Your Daily Checklist
  • Record sales receipts or create invoices for customers
  • Apply Customer Payments
  • Record debit, checks, and credit card expense receipts accordingly by account (ie, General checking account, American Express, Petty Cash, etc.)
  • Record deposits and transfers accordingly
  • Open mail and record incoming bills
  • Update online banking in QuickBooks Online (match or add as needed)
Your Weekly Checklist
  • Run A/P Aging report and have principal approve bills to be paid
  • Pay bills and have ready for principal to sign or pay online if already approved
  • File vendor bills and payment record
  • Review forecasted cash flow
  • Prepare reimbursements reports and issue checks as needed 
  • File all records accordingly
Your Monthly Checklist
  • Make payments of Sales taxes due on the 24th for the previous month (if applicable)
  • Reconcile Bank and Credit Card Accounts
  • Review Profit and Loss compared to budget and prior years to present to principal for the previous month (once all cash receipts have been recorded and all bank and credit cards have been reconciled) Note: We will present current month compared to previous year and YTD compared to the previous year 
  • Issue commission checks once financials have been approved and percentage agreed on (if applicable)
  • Review inventory and record adjustment in QBO as needed
Your Quarterly Checklist
  • FIle and Pay Quarterly Sales Tax due on the last day of the month following the end of the quarter (See See Filing Dates for Sales & Use Tax sheet)
  • Check-in with Tax Accountant about Quarterly Estimated Payments once all financials have been reviewed and approved by principal (JR Bookkeeping will assist on the reviewing of financials and meeting with CEO to get them approved)
Your Annual Checklist
  • Provide records for Workers Comp and Liability Audits as needed per policy periods
  • Review Year-end inventory analysis
  • Review full-year financial reports to provide to Tax Accountant for tax return preparation
  • Review tax returns before finalizing filing

Again, your business is unique and your accounts are going to reflect that, so feel free to add or subtract from these task lists according to your business needs.

However You Start, Start Now!

Beginning your journey to bookkeeping can feel overwhelming, but sticking to the basics is a great place to start. Create an outline and keep our checklist as a reference as you get going. You will not regret taking charge of your financials. Knowing where your business stands financially is a key factor to its success.

Still Unsure? Let Us Help!

Although bookkeeping is key to running a financially-sound business, not everyone is up to the task—unless you love it like we do! If you are overwhelmed, don’t worry, we have your back. As professionals, we know how to keep your financials organized and up-to-date so you can focus on growing your business and serving your customers. Sign up to today and get 1 month FREE so you can get back to financial peace of mind and doing what you do best.

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