Best Practices: Bookkeeping

Not everyone enjoys the data entry and detailed tasks involved in bookkeeping.  It is an essential part of running a business, so a small business owner needs to figure out the best way to get the job done.  Many owners tackle the job themselves in the early stages of their business to conserve money and then delegate the task once cash flow allows for it.  Bookkeepers can be hired as an outsourced service provider or as an employee depending on the amount of work that needs to be done. 

The bookkeeper enters all financial transactions into the accounting system used by the business.  Transactions include purchases, sales, receipts and payments by an individual or organization. This can be old fashioned paper ledgers or software programs.  QuickBooks has the most popular accounting software available for small businesses but there are many others available. 

We recommend consulting with an accountant before you select your accounting software program to make sure you have the best program for your business.  Some programs do not have all the features certain business owners need such as inventory management or progress billing.  We also recommend that you hire an expert to help with the setup of your accounting software program.  We see far too many cases where incorrect setup leads to incorrect financial statements.  Setup and training are always cheaper than cleanups.

Once you have your accounting program set up, you will want to establish a good process for getting the data entered.  The sooner the data is entered the better so you will have the information you need to run your business.  Details such as who and why are always easier to recall shortly after the event so entering purchases and other expenses quickly is always a good policy.

Good record keeping makes it easier to have good bookkeeping.  Next time we will learn how good bookkeeping creates good accounting.