Bookkeeping Tips

# 1  Keep an audit trail

An audit trail is nothing more than a record of all your invoices and checks in
numeric order. The thing to remember is never skip numbers. Record voided check
and invoice numbers in numeric order with all other checks and invoices, only
denote each one that is "voided." This assures there will be no gaps in your
numerical sequence and leaves a proper audit trail.

# 2  Due Date Reminders

It's a good idea to follow a payroll tax due date reminder. Whether you have a
payroll service preparing your payroll tax returns or you're preparing them
yourself, you should follow a check-off list of all the required payroll tax
reports. A good due date reminder would be customized to your business' specific
payroll liabilities and include the follow information:

Due date
Type of tax
Report number
Government agency
Time period covered
Submit money, a report or both

# 3  Be Consistent

Consistency is essential to successful business bookkeeping. If you use a paper
bookkeeping system, always be sure to head your columns the same way each month
throughout the year. This small matter of consistency will save you and your
accountant time and aggravation.

# 4  Keep Good Records

Many business owners don't keep good records. Some don't understand bookkeeping;
others understand it, but may be afraid of what the numbers might tell them.
Think of it this way--bookkeeping is the glue that keeps your business together.
If your records aren't in good shape, the business could fall apart. A healthy
business is monitored through its records on a regular basis so you can find
problems and correct them before it's too late.

# 5  Deposit Ticket Books

How do you handle your bank deposits? One easy way is to record your daily
deposit in a deposit ticket book. Generally, these books come with a white
(original) copy and yellow (duplicate) copy in books of 50. For a small
business, an order of 200 duplicate deposit tickets could last 2 years unless
you make deposits everyday. As you write each deposit ticket, it is a good idea
to remove the white copy to give to the bank and leave the duplicate (yellow) in
the book. That way nothing gets lost.

And don't toss those bank statements and canceled checks into a filing cabinet without reviewing them.  Resist the urge to do this! As soon as your statement arrives, review it before anyone else sees it, including your bookkeeper or employees.

That way you can catch unauthorized checks.

# 7  Petty Cash Box

Almost all small businesses make small cash purchases. You may want to set up a
Petty Cash Box to keep control of those purchases. Get yourself a metal cash box
and put in currency and coin that totals $100.00, for example. . This will be
your starting point. The value of this box should remain at $100.00 at all
times. Perhaps you or your employee purchases a notebook at the local office
supply store for $5.00, using money from the Petty Cash Box.  When you get back
to the office you will put your receipt in the box. Now you should have $95.00
in currency and one receipt for $5.00. The value of your box is still $100.00.
You can continue using the Petty Cash Box until you run out of cash. Then
replenish the   box by writing a check for "Cash", expensing all the receipts,
and cashing the check at the bank. After you cash the check, the new currency
and coin go into the Petty Cash Box, so you'll be starting again with $100 in
the box.

# 8  Automatic Pencils

Take a tip from accountants: save time with automatic pencils, since you never
have to sharpen them When you need more lead you just click a button and the
lead drops down.  Buy one the next time you're at the office supply store.

# 9  Storage Boxes for Each New Year.

Keep all your records for one year in one box. You can put a copy of your tax
return, bank account statements with cancelled checks, your BIG E-Z(r) Paper
System and BIG E-Z(r) Receipt Storage Book, financial statements from your
accountant, your paid bills and all other backup for that year in one box. Label
it with the year and contents on the outside of the box. Then store it somewhere
accessible.

# 10  Filing Paid Invoices

Start new file folders at the beginning of each year for all your paid invoices
and paid bills.  It's not necessary to start a folder for each customer or
vendor unless you do a large volume of business with that customer. You could
get by with a folder for all customers from A - C, D - F, and so on.

# 11  Printing Invoices

If your business uses a large number of invoices each month, you may want to
have invoices preprinted. It will look more professional and you will probably
get paid quicker. If you decide to print invoices with a perforated edge so
customers can tear off one portion and return it with their payment, be sure to
print your name and "remit to" address on both sides of the perforation!

# 12  Note Pads with Your Name

For a very professional look, print note pads or sticky note pads with your
company name and phone number, with your slogan at the bottom.  This can be a
real time saver. If you also print the pad with "From the desk of . . .", plus
your name,  you'll never need to sign your name.

# 13  From Paper System to Computer Program

When going from a paper bookkeeping system to a computer system you will want to
run dual systems for a few months. You want to be sure both systems come up with
the same totals before dropping the paper system.

# 14  Deposit That Cash Right Away

Get into the habit of depositing all cash immediately at the bank or credit
union once it is received. This ensures that all income will be properly
recorded.

# 15  Choose the Right Accounting Method. Cash or Accrual?

Many small businesses opt for the cash system because it is much simpler. In
fact, the IRS requires that you use the accrual method only if you have $5
million in sales or carry a large inventory.

# 16  You Are Taxed On Profits

Many business owners think they are taxed on all the money they take out of
their business. In fact, if you are a sole proprietor (rather than a
corporation) you are taxed on the profits of the business-not the revenue. Your
estimated income tax payments should be based on the
profits of the business.

# 17  Maintain daily records

Think about it. If you don't have time to do a little bookkeeping each day, when
will you find time to record a month's or a year's worth of records? Different
people use different record-keeping systems; what matters most is that you have
a system and use it daily.

# 18  Voiding Payroll Checks
 
Before voiding a payroll check, call your state or consult your attorney to see
if this is legal in your state.

# 19  Keep Phone Messages Bound 

Try not to use scrap paper for phone messages. Use the bound message books you
can get at any office supply store. As you return calls, cross them off. It's an
easy way to keep track of unfinished business.

# 20  Computer Software 

The biggest mistake people make is not taking the time to set up the software
correctly when they install it on their computers. The old saying "Garbage in-
garbage out" applies here. If you want a financial report you can trust, you
will need to be sure it is set up correctly
from the start.

# 21  Credit Unions
 
Some credit unions offer business checking accounts at lower rates than most
banks. Check it out the next time you need to reprint checks.

# 22  Start at the end

When starting a new business, determine what expense categories to track by
taking a look at the tax return you or your accountant will need to file.  If
you are required to file a Schedule C, get a copy of a blank Schedule C and
write down all the categories that apply to your business. Then include those
categories when you set up your bookkeeping system.

# 23  Don't over-categorize.
 
Most of us tend to make things harder than they need to be. For instance, when
categorizing office supply expenses, we don't need separate categories for fax
paper, letterhead and printer cartridges, etc. All these items can simply be
listed under Office Supplies.

# 24  ATM Cards for Your Business 

Save time by using preprinted deposit tickets and an ATM card to make your
business deposits.

Bookkeeping tips compliments of Michelle Carley from Big E-Z Bookkeeping Co. Michelle is an Internet-based mom who designs bookkeeping software without all the bells and whistles for under $30. Ideal for the smallest of businesses with simple bookkeeping needs. For more information visit www.bigez.com