In our previous post, “Bookkeeping Clean Up Planning: A 5-Step Checklist“, we reviewed major considerations for before the clean up. This week let’s discuss how to make your clean up stick after the clean up is finished.

Running a successful business requires more than just providing excellent products or services—it demands meticulous financial management. One key aspect of this is maintaining organized and accurate bookkeeping. As we approach the new year, let’s delve into some best practices for cleaning up your books and setting the stage for a financially sound future.

1. Segregate Business and Personal Spending:

Separation is key when it comes to financial matters. Ensure that you maintain a clear distinction between your personal and business expenditures. Start by using a dedicated business credit card exclusively for business-related purchases. This simple step will prevent the intertwining of personal and business finances, making bookkeeping more straightforward. Resist the temptation to use personal credit cards or cash for business transactions to avoid complicating your financial records.

Taking stock of your spending habits at the beginning of the year is crucial. By maintaining a clean separation, you’ll eliminate the need to sift through personal transactions during audits, saving you time and stress.

2. Monitor Ongoing Fixed Transactions:

To keep your cash flow and bookkeeping in check, regularly monitor ongoing fixed transactions. Create a simple spreadsheet detailing vendors, payment dates, and amounts, whether fixed or average. Regular updates are essential since errors in spreadsheets can lead to accounting discrepancies.

Businesses rely on steady cash flow to address challenges and seize opportunities. By staying on top of fixed transactions, you can avoid surprises like overcharges on utility, telecom, or insurance bills.

3. Utilize Software for Efficient Bookkeeping:

Choosing the right software can significantly expedite your bookkeeping process. Local travel expenses, often overlooked, can be efficiently managed using apps like QuickBooks Time. Capture your travel details, apply the standard mileage rate, and automate the tracking process.

Even if you prefer paper receipts, modern software like QuickBooks Online can streamline the process. Snap a photo of your paper receipts, input the image into QuickBooks, and let the software seamlessly integrate the information into your financial records.

4. Streamline Bookkeeping Processes:

Small business owners dedicate a substantial amount of time to administrative work, including bookkeeping. Simplify this process by establishing a uniform system for invoicing and payments. Whether through software or a straightforward manual process, ensure that every receipt is promptly recorded.

Consider setting up a system where all paper receipts go into a designated file, and email receipts are forwarded to a specific address. This simplicity will save you time and reduce the likelihood of errors in your records.