3 Foolproof Ways to Clean Up Your Bookkeeping

Bookkeeping, properly done, is one of the most often overlooked aspects of a new business or office manager. It always seems like a task that can be put off, or perhaps never completed at all. After all, what’s really wrong with the way you are doing things now, right? Sure, it may be a little messy, and yes, you can’t always find what you need when you need it, but that’s still preferable to spending all day and night trying to organize all the clutter.

 

You may want to re-think this perspective on organization. You could be spending a large amount of manpower and time on chasing down receipts and paperwork, and you may not even realize it. Think about how much time has been wasted in the last month, for instance, looking for paperwork that should have been easy to find in seconds. Now multiply that by the amount of time you have been in business and see how this kind of wasted time can add up. And the worst part is that with a situation that you have now, paperwork and receipts can become easily lost. This paper trail is essential for a business. Imagine if you get audited by the IRS. It only makes sense to organize your bookkeeping, which is why we have devised a simple plan for you to do so.

 

Time is a Critical First Step

 

The first thing you need to do is set aside a chunk of time in order to accomplish this task. How long it will take will depend on how disorganized your bookkeeping is. No matter how messy your system has become, however, there is no reason it should take more than a day or two to set things right. If you need to, have one of your assistants come in on a Saturday and see if you can work as a team to get things in order in one day without interruptions. Grab a large three ring binder, such as those made by Cardinal, and get a hold of some divider cards to help make the transition smooth. Get some letter sized paper, a stapler, and some plastic folders. The only other thing you’ll need is your business receipts and paperwork. All of your invoices, scrap pieces of paper that important things are written on, and anything else you think needs to be better organized than it is. Head out to the coffee shop, grab a big cup, and set to the task of making your office run more smoothly, and making your life a lot easier.

 

Getting Organized

 

Okay, you’ve got your coffee, you’ve got your assistant, and you’re bravely taking time on a weekend to make things right. Trust us, it will be worth it in the long run (although your assistant may never see it that way, so hopefully you’ve bought him/her a coffee, too.) The first thing you need to do is organize your binder into separate sections. The first section will be for invoices that have not yet been paid. This will most likely be invoices from your suppliers or vendors. Write at the top of the invoices the date on which they are due and then organize them in such a way that the one that needs to be paid first is on top. The second section will be for your paid invoices. Receipts, in other words. Since many receipts and invoices don’t come in a handy letter size format, staple those that don’t to a sheet of paper for easier storage. Write at the top of each of the invoices the method you used to pay them. The next section is for unpaid invoices that you have sent out–money that is owed to you. Then a section for invoices you’ve sent out that have been paid. Finally, make a section for bank statements.

 

Keep It Organized

 

After you have accomplished this wonderful task, you do not want things getting back into disarray. This can happen more quickly than you might expect. You’ll want to set aside a day each month (or even more frequently if you feel it needs it) that you revisit your bookkeeping binder and make sure that things are still working in the way you set up. In fact, you may find it easier to simply gather your invoices and receipts in a folder and then add them to the binder on that scheduled day each month. Either way is acceptable, and the latter way may save you some time on a day to day basis.

 

Bookkeeping Basics

 

Now that you have everything nice and tidy and neat, you have two options at the end of the year. You can either take out that binder and use your own savvy and some accounting software to see where you are at, or you can just hand the whole folder off to your accountant. Either way, your new bookkeeping system should make things a lot easier to deal with come the end of the year, and come tax time.

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title="" rel=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.