Do you dread bookkeeping? Does your accountant audibly sigh when you bring in your paperwork every year? Here are 4 quick tips to remove some of the pain and delirium over bookkeeping.
1) Set an appointment every week for bookkeeping activities.
Block 60-90 minutes every week at the same time. Make it a time where you concentrate because if you already detest bookkeeping getting interrupted or being able to postpone in lieu of something else will only make it worse.Use that time for entering your purchases, filing receipts, and completing monthly bank reconciliations. Having this consistent time keeps us on track, ensures we have up to date information, and helps us catch errors quicker.
Make receipts and accounts payable weekly activities in whatever time block makes sense. A smaller portfolio may only require 40 minutes a week for these. Then once a month set a specific day of the month (10, 13th, 23rd) where you are reconciling the previous bank statement and allow yourself 30 minutes for this. (If you are on top of your bookkeeping even the most active account takes less than 30 minutes.)
2) Create an electronic file of your receipts.
Receipts fade, get spilled on, get torn. It’s your responsibility to maintain a good record of your accounts. This includes preventing against receipt fade and life accidents. Scan your receipts into an electronic file weekly.
Pro tip: To make audits (eek!) easy, your receipts should be filed by year and accounting category. Accounting category is whatever account you assigned the transaction in your bookkeeping software. Paint, repair, advertising, etc. On a computer (which I highly recommend your digitize your receipts) your main folder would be the year and your subfolders would be your accounting categories. (2019-postage; 2019-cell phone, etc)
Bonus: If you still use a flatbed scanner, receipts can be trimmed and more than one in the same category can usually fit in a file.
3) Have receipts with mixed accounts on them? No problem.
You can create one file category you name as “mixed”. On your receipts itemize each item by category and calculate the totals for each account. (Want to earn extra credit, you could even color code your account on your mixed receipts.)
4) Do quarterly company cash flow checkups.
Every quarter pull up your company or property cash flow statements and just do a quick audit. Do you have any accounts that suddenly appeared out of the blue? Any numbers seems abnormally high? These may be signs of clerical errors you need to adjust. Doing this quarterly will prevent hair-pulling and headaches for you (or your accountant) at tax time.
5) Make A Checklist Of What You Need For Your Taxes.
I also felt like I was shooting fish in a barrel when I sending documents in for my taxes. I would send the business statements, husbands w-2, my 1095-A from the marketplace, mortgage statements. I’d think I was on the ball. Then I’d get an email from my accountant. You missed [mileage, car insurance payment, payroll docs, student loan docs, etc].
One year I was done feeling like a headless chicken and sat done with my accountant to create a checklist of the docs I should have every year for all my companies. I then took that checklist and make it a Google Note checklist where I copy the master every year and check items off as I send it to him. I know I’m happier and I think my accountant is happier too!
Make tax time less stressful by being ahead of the game and on top of your books. Keeping your books organized makes you life and mind seem less cluttered. Mistakes caught early are easier to fix and receipts nicely categorized make auditors…almost smile. Those are some pretty good reasons to stop putting off bookkeeping and start making it a routine priority.