As a new business owner, one of the first challenges that you need to work out is your bookkeeping process. Even if you opt to work with an accountant to manage your periodic reporting and tax filing, you still need to manage your books regularly. The good news is that, with the right routine and system, it can be much easier than you might think. Here are the key steps to help you establish a bookkeeping routine for your business.
Start by Recording Everything
The first, and most important, step in your bookkeeping routine is recording your transactions. You'll need to have bookkeeping software that organizes all of your financial activities. If you don't think you'll have time to manually enter all of your transactions every week, you can opt for software that will import the information directly from your bank. Many bookkeeping programs will link to your company bank account and import transactions with the click of a button. Then, you'll just have to categorize transactions once they're imported.
Make Sure You Reconcile Your Accounts
It's important that you reconcile your bookkeeping ledger with your bank account statements every month. This step is crucial because it ensures that there are no missing transactions in your bookkeeping logs nor any duplicate transactions that could be throwing your records off. Even if you're importing your transactions from your bank, you'll still want to do this because any automated process can fail or have errors at any point, so you need to reconcile your statements to be sure that everything is accurate.
Take Time to Review Your Ledger
Once everything is reconciled, you should go back through your ledger and assess it for any errors in transaction classifications, any transactions that were not reconciled as part of the process, or any other unexpected transactions. This is important because it helps you to identify any transactions that may not have posted to your bank yet, including any potentially missed deposits.
Finalize Your Reports
Once you've finished reconciling and reviewing the month's transactions, finalize that month in your accounting software. The process will vary from program to program, but the goal is to lock that month's transactions so that nothing can be inadvertently changed.
After this is done, you can run a report for your entire month's transactions and statements to send to the accountant who handles the rest of your financial reporting and activities. You may even be able to link your ledger account in the accounting software to your accountant's platform so that they can access it from there instead of needing the reports generated every month.
For more assistance with small business finances, contact local bookkeeping services.