Top 10 Do’s and Don’ts For Your Business Bookkeeping Practices
Whether you have just started a business or you have been running a successful business I would love to share with your El Paso bookkeeping best practices; you need to know basic good and bad practices for your accounting and bookkeeping through out the year. In this blog post I hope to provide you with a good starting point so that you can be better prepared when you tackle this yourself or when you hire a professional like me and my team here at Blue Pearl Tax & Bookkeeping.
As an business owner you should focus your energy and efforts on doing what you do best and leave the bookkeeping and accounting to a professional. The caveat here though, is that the tax professional you hire to keep track of your revenues and expenses needs to be a good one and above all be transparent and keep you in the loop when it comes to the financial health of your business. Here are the top ten do’s and don’ts when it comes to your business’s financial health.
BLUE PEARL’S TOP 10 EL PASO BOOKKEEPING BEST PRACTICES
- THIS IS THE MOST IMPORTANT – Always have a basic understanding of bookkeeping or accounting. Any business can / will benefit from lowering costs & increasing its margins but if you don’t know your books is hard for you to calculate best possible profit sources.
- Never go at it (running a business) alone! Have a trusted tax and bookkeeper a quick call or text away because many processes and decisions you take will influence your taxes at the end of the year.
- Decide on an accounting software program (think Quickbooks for example) that works best for your style; there are many software program choices on the market. If you have the resources or need a more complex solution, there are firms like BetaBulls.com who provide with custom built software solutions.
- Try to consolidate your books for profit and losses weekly if possible, this makes everything a lot easier every quarter. If you have a corporation or partnership this will make things a whole lot easier for your business partners. This is one of the many obvious reasons why you should hire a bookkeeping service.
- For retailers, having a system in place to track inventory is key because your accounting is directly tied to the items you have available for sale, their cycles, your inventory notes, their shelf life, etc.
These are also really good tips to follow:
- Schedule an hour or two each week to reconcile your bank account on a monthly basis – some DIY bookkeeping SaaS tools offer this as part of their service.
- Maintain a cash flow spread sheet and update it at least weekly.
- If you have employees or contractors, outsource your payroll reporting to a payroll service provider; they have the skills to keep up with the myriad state and federal reporting that is inherent with payroll.
- Have someone put together a financial statement (budget) at least once a month so that you know where your business is headed. This is important for those companies who are investing in other resources such as marketing, positioning, capital investments like building retrofits, machinery, or equipment.
- Make sure to never NEVER mix your business bank accounts with your personal bank records. Doing so can delay your filing process and possible affect other parties.
BLUE PEARL’S TOP TEN WORST EL PASO BOOKKEEPING PRACTICES
- Not verifying the individuals and company that handles your accounting and whom you give authority to sign your checks.
- Commingling personal and business assets – that includes cash.
- Using your sales tax, mortgage payment budgets for something besides that.
- Never give your cash flow projections to someone else.
- Never be overly optimistic with your finances. Set SMART goals for your business cash flows. (Specific, Measurable, Attainable, Relevant, Time sensitive)
- Don’t ever rely on a handshake or verbal agreement when it comes to making purchases for your business.
Ok, quick break… reflect on what we’ve learned… got it? Here’s the rest of my top 10 worst practices:
- Never write checks for invoices without matching them to a purchase order first.
- Never wait until the last minute to hire an expert. Not only does this make it harder for us to help you but is usually more expensive because of the time it requires us just to get you caught up. If needed, call us, your preferred El Paso Bookkeeping service today for your free consultation, (915) 996-3981.
- Don’t ever put off establishing a relationship with a banker until you need financing, if you are reading this in El Paso you are in luck. Get in touch with one of my dearest friends Mike Azarte of Evolve Credit Union. You can email him at firstname.lastname@example.org to schedule a sit down with him to get that relationship going. Is good practice, trust me.
- Not subscribing to news or publications that can keep you informed with ways you can increase your profit margins and keep the IRS off your business with penalties and fees.
I hope this blog has given you a new perspective for your El Paso bookkeeping accounting best practices; if you are interested in learning more about us and our services please make sure to contact us to schedule a free evaluation of your business.
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