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Tips for Effective Bookkeeping

Apr 07, 2022
Accounting

Bookkeeping, otherwise referred to as record keeping, is a part of the accounting process concerned with keeping detailed and accurate records of an organization's business transactions in a well-structured and orderly format. 

The primary objective of bookkeeping is to ensure that all the sale transactions of the organization are kept coherently for both reference and legal purposes. 

Listed below are some helpful tips for effective bookkeeping

Secure your receipts: Keeping receipts the old-fashioned way, which involves piling up receipt papers in your office, may not be necessary as you could scan all your receipts and keep them in your bookkeeping software by attaching an electronic copy of the receipts to each transaction. 

Subcontract your payroll: Payroll is a list of employees who receive salary or wages, together with the amounts due to each. It may not be easy to put your payroll together yourself because it can be time-consuming and confusing, so it's advisable to pay someone to get it done for you at a reasonable price. On the other hand, suppose you pay payroll providers to outsource your payroll. In that case, you may want to explore the safer option of opening a separate account dedicated to your payroll instead of using your primary business account.

Pay yourself: Paying yourself a salary will help you observe the golden rule of not making your business pay for your personal expenses and vice versa. It is advisable to use the payroll system of payment like the one you use for your employees as this ensures discipline.

Ensure that your records are clearly distinguished from each other: The financial records that bookkeeping entails are the purchase invoices, sales invoices, and cash book. 

It is advisable to sort the purchase invoice file by the date/time of purchases made alongside the payment method used. 

The sales invoice file keeps a record of all successful sales made. Therefore, keeping the unpaid sales in a different file is essential.

The cash book records the credits and debits made on the business's bank account. With this record at hand, it will be easy to make forecasts.

Disallow frequent credit sales: When a credit sale is made, give deadlines for payments and follow through with the deadlines given. Regular credit sales may bring ruin to your business and cause you to be in debt.

Make plans: Richard Cushing once said, "Always plan ahead. It wasn't raining when Noah built the ark", and I couldn't agree less.

Looking through your financial records from the previous years or months, you have probably been able to observe times when you could have spent less money by planning ahead.

Pinpoint significant expenses(like tax) and make plans for them. Don't exempt impromptu other expenditures that may come up during the course of the month or year. Also, allot a particular amount of money to that - this will reduce the risk of running into debts.

The opinions expressed in our published works are those of the author(s) and do not necessarily reflect the opinions of the National Association for the Self-Employed or its members.

Courtesy of NASE.org
https://www.nase.org/business-help/self-made-nase-blog/self-made/2022/04/07/tips-for-effective-bookkeeping