As a new business owner, you may not have a background in accounting and knowing where to start can feel overwhelming. Not knowing if you're doing everything you are supposed to can also be stressful!
The bookkeeping process is not difficult, but there are a lot of moving parts to keep track of and take care of.
Here are 4 steps you should be taking on a monthly basis to maintain your bookkeeping workflow:
1. Record the transactions in your accounting software/spreadsheet
Using your receipts or bank/credit card statement, you can add all transactions to your accounting system. Some accounting systems also have bank feeds that help automate this process.
2. Organize & store receipts
Use a scanning app or your camera to take a photo of your receipts and send it to a cloud-based storage like Google Drive, Dropbox, etc. Throw away paper receipts once safely stored and make sure to keep digital copies of your receipts for up to 7 years in case of an IRS audit. Some accounting apps like Quickbooks & Xero have the ability to scan receipts directly from your phone, which is a really cool feature. You can also opt to use a receipt management program such as Expensify.
3. Reconcile accounts
Reconciling accounts is the process of comparing bank account, credit card, and loan statements with financial data. Accounting software have features that make this easy to complete each month. Reconciling your accounts will help you catch duplicate entries or missed transactions, spot data entry errors, avoid embezzlement and mismanagement of money, and helps produce accurate & reliable financial reports.
4. Close the books
Closing the books prevents future changes to financial records by adding a password at the end of each month. Doing this helps you avoid accidentally adding income or expenses in a prior period that may affect sales and income tax payments and filings, unintentional errors, and also helps produce accurate and reliable financial reports.
Not feeling too confident in your bookkeeping? We can help spot check your work and point out any potential issues or areas for improvement. Book a call today to get started: https://calendly.com/lotus-fms/discovery-call