Managing cash flow from your business is challenging. When invoices are late or missing, employees getting paid quickly becomes complex. You don’t want to keep paying because it costs you more than the invoice amount.
Bookkeeping is an essential process in the financial department of any enterprise. It’s wise to subcontract trusted bookkeeping services in Honolulu to ensure data is correct and updated to avoid late or missing invoices. Read to learn day-to-day bookkeeping setup and process.
Manage Accounts Daily
Set up a system for tracking your transactions. You should have at least one account per customer: one for cash sales and another for credit card sales. It ensures you know how much money has been received from each customer and when received. You could also use other accounts to track other sources of income (such as deposits or bank interest).
Each type of transaction has different requirements for reporting income, tax deductions, etc. For example, if you sell something on credit, don’t report any income until the payment has cleared into your bank account – but if someone pays cash, report this immediately.
You should also have an account for each employee who works in your shop (or other business).
Reconcile Bank Accounts
It ensures that the information in your accounting system matches the bank’s records. Compare your bank statement with the list of deposits shown on your receipts. If discrepancies exist between these two sources, reconcile them by entering any missing deposits, withdrawing duplicate payments, or adjusting other errors.
Client Statements and Invoices
Send this out monthly to all clients so they can clearly understand their monthly costs. The statement should include charges for each type of service, such as payroll, tax preparation, and accounting services. The statement should also include a running total of all fees charged for the year so far. It may help them decide on additional services they want to purchase from their accountant.
Also, send out invoices for each service provided to a client, whether it’s an invoice for payroll or an invoice for tax preparation services. The invoices always include a breakdown of the charges and totals so the client can quickly see how much they owe.
Inventory Management
You must have a system that keeps track of all items, whether supplies or inventory. Keep track of reorder points and when items are received. If an item is running low or out, you can contact your supplier and order more before encountering customer problems.
Payroll Management
Set up the payroll system to ensure accuracy and compliance with all tax laws. Good payroll software will help you maintain your records but also have a process to ensure everything gets done correctly.
Here are some tips for maintaining your payroll records:
- Keep track of all employee information, including names, addresses, social security numbers, birth dates, and other relevant information. It’s easier to enter data into the system and verify it later.
- Record all earnings from each paycheck in your ledger book. It includes all deductions, such as taxes and insurance premiums, as well as bonuses or other forms of compensation paid out during the year. Record this information each time you pay an employee, so there is no confusion.
Bill Payment
If you don’t pay your bills timely, you will be penalized by the bank or another service provider. If this happens, it can hurt your credit score and cause your bank account to be closed.
Use Google Sheets budget template or Microsoft Excel to create a list of your bill due dates and payment amounts (along with any late fees). This way, all the information is in one place, and any new items can easily be added as they come up during the year.
Data Backup
If you lose your files or someone steals them from your computer, it can cost a lot of money and time to recover them. Ensure there is data security through cloud storage. Cloud storage services allow you to access your data anywhere at any time. Still, they also provide additional layers of protection against file theft or ransomware attacks by storing your files on servers that are not directly connected to your computer or mobile device.
Bookkeeping is a vital function for any small business, but this doesn’t mean it has to be complicated. Suppose you have secure accounting software that allows you to connect to your bank accounts and automatically categorize transactions. In that case, you can begin collecting data that helps you manage your business. Otherwise, get acquainted with the logs and spreadsheets often used for bookkeeping. Opening Excel skills are a must for every business and can be picked up very quickly.
Taking Control of Your Business Finances with Bookkeeping Services
Taking Control of Your Business Finances with Bookkeeping Services