How to Do Bookkeeping for Small Businesses

You don’t need to have an extensive accounting and bookkeeping background to run a business. Especially since outsourcing your needs is more accessible nowadays. However, you may still want to be able to keep a close eye on your books to keep accountability. Use these simple tips on how to do bookkeeping for small businesses and make sure everything is running smoothly.

1. Run a your profit & loss report

Do this on a monthly basis. Many common mistakes are improperly categorizing expenses, so this gives you a chance to review any items that look incorrect – negative balances, huge variances that look off to you, expenses being high, cost of goods unreasonable.

2. Review your balance sheet

Look at bank balances and ask yourself: “do these look correct?”. Do balances look reasonable and have accruals been processed, prepayments etc. Check that your sales tax is correct and returns have been made.

3. Run your AR & AP reports

Review to see your aging details, is anything in more than 60/90 days. Are any accounts in a negative?

4. Bank Reconciliations

Check to see if you bank reconciliations have been done. Are there outstanding items unreconciled for a long period of time (6 months or more)?

5. Establish strong communication and processes

Communication is key between you as the business owner and your accounting firm. This will help kibosh any major issues early on, make sure you both understand from the beginning that there will be an open channel of communication on a preset basis.

Applying these checks throughout the year will enforce your amenability and loyalty as an owner. It will also reduce the chances of mistakes which cause issues come corporate tax accounting season or audits. Getting business tax preparation service is a cheap and efficient way to make sure you minimize your tax pressure and take advantage of all available government tax credit programs. There’s never too much that a boss can do in the way of double checking that things are running smoothly. As long as you have people you can trust to do the job, a check is all that is needed.