Being “behind on bookkeeping” is nothing new in the business world. Most small business owners can attest to being behind at some point.
But “being behind” can range from days to years. And unfortunately, the longer you go with poor bookkeeping practices, the more difficult it becomes to “catch up.” Plus, the mental weight of knowing it needs to do gets more and more.
Below are four crucial tips to help you get your books in order.
Gather Your Paperwork
First things first, gather your receipts, invoices, etc. To get your expenses calculated for taxes, you need the supporting documentation for those costs. Hopefully, you have one spot where you keep this kind of paperwork. If not, here’s a hint for next year!
In fact, we encourage you to use a digital receipt tracker (an app or an option within your accounting software). You don’t have to keep up with paper, and the reports are easily shared with your accountant.
Customer invoices or payment receipts should be gathered as well. Your accounting software should have these.
(If you don’t have accounting software, please reach out to us. We can help you choose the right one and get you started quickly. Software like QuickBooks or FreshBooks that you use consistently is the key to good bookkeeping.)
Separate Business and Personal Expenses
Another area for consideration is personal expenses versus business expenses. If you own your own business, chances are you not only have business receipts but receipts for your personal life. These MUST be separated. Only business expenses should go into your business’s accounting books.
You may have receipts that contain both business and personal expenses, and those will require careful review, preferably by an accounting professional. Going forward, we strongly suggest separate transactions, even if that means a second checkout at a store. Don’t mix business with personal.
If you’re not already using an app for tracking receipts, one easy way to store business expenses (for now) is to digitize your paper receipts. You can take a picture or scan each document. When you digitize, there’s no need to maintain paper copies, and you can sort and backup these files to the cloud. This leads to less clutter for you, no concern of receipts fading over time and digital files are easier to share.
Get Professional Help
If you feel swamped, overwhelmed or unsure of where to start, it’s time for professional help. The longer it’s been since you last had your bookkeeping in order, the more overwhelming it can be to get back on track.
If it seems insurmountable, don’t tackle it alone. At Morgan & Associates, we’ll gladly sit down with you to go over your bookkeeping struggles and create a plan for getting you back on track.