Before jumping into opening a new business, there are a few important things you need to consider.
The IRS obliges any legal business to keep basic financial records in order to precisely track receipts, expenses, and basically any other transactions under your company’s name. The details of your record-keeping system are up to you, but an organized, well-planned business bookkeeping system will keep your financial records in good order, accelerate and facilitate reporting, and progress with your business as you grow.
Where do I start?
Here are a few points worth considering while starting up, to get you going.
What kind of account do I choose?
This is very important to decide on, in order to gain a clear overview of your records. Businesses have the option of choosing cash accounting or accrual accounting. The latter is usually the best option to go!
Why?
Simply because it gives you a more accurate and reliable summary of your transactions. While cash accounting records cash flow once received/paid, accrual accounting actually records all transactions at the earliest possible time. That way you can track your records for both, payable and receivable for today, and the upcoming monthly more accurately and more realistically. Furthermore, once your business reaches $5 Million in revenue, you will need to change to accrual accounting anyways. Changing your bookkeeping then will end up in huge chaos and confusion.
Can I use my personal bank account to start off?
It is not advised! Having an account solely for serving your business is a must-have! It is important to make sure that ALL business transactions are going through this, and only one, account. This solves a lot of problems such as importing all your transaction information from your business bank account straight into your bookkeeping which will save a lot of time and the unneeded hassle of separating your personal and business-related expenses.
Furthermore, this shows the IRS and other authorities that you are keen on keeping your business's financial information in a professional and transparent manner.
Do I need to use bookkeeping software?
This is entirely up to you, your budget and your business need. Theoretically speaking you can handle your bookkeeping using excel. Even with a pen and paper if you like. But practically speaking, a software is a must-have for all businesses. This does not only save tremendous time, but it will also save you from any human mistakes that could be made and that might end up costing you much more than investing in a software.
But how do I keep THAT organized?
By dividing your transactions into charts. This is also a time where investing in a software makes your life easier. Think of this chart as the skeletal structure of your transactions.
Do I keep track of all my expenses?
YES! In order for you to keep accurate records, all transactions need to be recorded. Therefore, tracking your expenses is a must. You might end up with a table full of receipts. That's why you need to have a structured way in which you organize them. This can be alphabetical, by date, or by any other structure that is easy for your bookkeeper.
Your electronic receipts?
One simple and effortless way is to take pictures of all paper receipts and save all of those photos in addition to your electronic receipts with the help of QuickBooks’ dedicated receipt-photo feature.
Will this ensure my records and bookkeeping structure is accurate?
Here is where we do a monthly reconciliation process! This is the procedure of matching up your bank statement with your business’s actual bookkeeping, to confirm that both are accurate. The details of that are on us.
Setting up a neat and accurate bookkeeping system can be a burdensome process, and can get quite expensive if not done correctly. Therefore, we always recommend getting help from an experienced and knowledgeable bookkeeper.
We'd be glad to take your bookkeeping off of your shoulder to save you the stress and furthermore ensure that your business is starting off right!
Only $499!
You will get a review of your entire business’ books and bookkeeping system, walk you through the Diagnostic Review, show you the ins and outs of the results and explain what it all means for a fraction of what it would normally cost you.
After we’ve gone over this report with you, if you don’t feel that we have shown you the value and helped you identify troubled areas and a plan of action that will help you make more informed decisions, simply, reach out and we will refund your money, No Questions Asked!
© Copyright 2023 | 3Z ProBooks LLC