Small Business Bookkeeping Tips: 3 Pieces Of Information That Should Always Be Found In Your Books

July 23rd, 2013 by Bryan Brown

If you own a small business you know that there are many ways to keep your books that range from hiring an accounting professional, keeping them on paper or using any of the various softwares that have become available. Regardless of which method you choose, proper small business bookkeeping practices are essential to maintaining your company. Keeping detailed and current records may help you and your business avoid devastating cash flow issues as well as serious legal troubles. Keeping clear books will serve two distinct purposes for your small business-enabling the IRS to evaluate your business and also helping manage your business more smoothly. To help you in these endeavors we’ve compiled a list of several pieces of information that all books should contain.

Revenues and Expenses

When you own any kind of business it is important to know how much money is being paid out, where it’s being paid and how much money is being collected. The easiest way to keep track of where the money filtering through your business is going is by keeping detailed records of your revenue and expenses. It’s possible to maintain these records through a journal, a method that details receipts and expenses, or by using a ledger, a method that records transactions as debits and credits. By keeping a close eye on your revenue and expenses you will greatly increase your ability to forecast what is happening with your business. Is profit up?  Are you selling more of a product? Are you managing inventory effectively? Is profit down? Why is this happening? Keeping detailed records about how much money is ebbing and flowing from your business may help you make more informed decisions concerning what actions to take to help your business succeed.

Accounts Payable and Receivable

Creating a solid method for timely and accurate billing is one simple step in ensuring that your small business’s bookkeeping system is doing the most it can for you. When you own a business it is imperative to keep detailed track of what customers owe you and what you owe to others. When compiling these records it is prudent to amass as much information as possible including invoice numbers, dates, amounts, terms, amounts paid or due, balances and client information.

Cash Expenditures

In your bookkeeping it is important to record the cash your business spends so that you will have an accurate account of your expenses each year. Writing reimbursable checks or keeping petty cash records are both very valuable ways of documenting how much money your business is spending. However, a financial statement that has many payments filed under “petty cash” may be misleading, or even worse, totally wrong, which will wreak havoc on your bookkeeping. Just remember that the goal of a petty cash fund is to accurately record small expenditures in the proper time frame all while tracking delicate cash balances.

Regardless of how you choose to keep your books, it is imperative that you do so efficiently. Keeping clean, clear records will help you to maximize your cash flow and will help you to make sure that your business is reaching its full potential. If you do decide to take your small business bookkeeping into your own hands, it may be a good idea to consult with an accredited accounting professional to double check that the system you’re using is both simple and effective. Getting a good foundation for your bookkeeping early on will help keep your small business on track and your profits growing!