Good Bookkeeping Habits

Bookkeeping is similar to accounting, but accounting typically refers to the process of analyzing the data collected through bookkeeping tasks. On your calendar, plan Monthly Bookkeeping Checklist out when you’re going to collect reports, record transactions, and close your books. Establish a closing date by which all expenses and income must be posted.

• These are the most important bookkeeping tasks that I take care of each month.
• See the daily, weekly, monthly, quarterly and annual accounting tasks that are important for all small businesses.
• However, the IRS and most states require quarterly payroll reports and any remaining quarterly payments.
• Once that is done, make sure to print out and save copies of your year-end Big 3 Financial Statements.
• If the IRS audits your company and finds any underpayment of taxes, it will come to you, not your accountant, for any additional taxes, penalty and interest.
• If the balance sheet shows more inventory than exists, make adjustments to material expenses.

Petty cash is essential to run day to day business operations smoothly. So, bookkeepers should maintain a petty cash book, write slips each time cash is taken out, enter petty cash entries into software and reconcile it at the end of the month.

Task #19 Maintain Foreign Currency Account

According to IRS Publication 15, small businesses that reported less than $50,000 or less in taxes for the last lookback period make monthly deposits. Any business that reported more than $50,000 needs to make semiweekly deposits to the IRS. You can find the reported taxes for the lookback period on line 12 of the 941 form. Small businesses that sell products need to record and track the flow of their inventory.

• Monthly bookkeeping may not be all you need as a larger business—but it’s an important part of the bookkeeping process.
• Recording bills as a weekly bookkeeping task also makes it easier to check that accounts have sufficient funds.
• Make monthly adjustments to each item on the business balance sheet.
• Plus, you can make more informed business decisions about how to spend it.
• Depending on your payroll schedule, running payroll could be either a weekly, bi-weekly, or monthly bookkeeping task.

Use cloud-based applications to store data and ensure your information is always available and automatically backed up. Relying on your hard drive leaves you vulnerable in the face of burglary, fire or natural disasters. If you use your hard drive to store data, make sure you do at least one monthly backup online or to an external device. Other job tasks include recommending budgets and monitoring … Industry professionals possess accounting, marketing, and computer science expertise. Amidst the astonishing loss of life, a quieter accounting must also take place … And a former maintenance garage on the state Superfund list.

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In addition to managing expenses, business owners must also maintain payroll and oversee employees. Certain aspects of inventory management are beneficial to do more frequently than on a weekly basis to keep updated information on stock. For instance, recording receipt and sale of inventory should be daily bookkeeping tasks for businesses working with higher sales volume or perishable goods. It can all get complicated quickly, so inventory management software that integrates with your bookkeeping software can be a lifesaver.

Vishal Sanjay is a content writer with a passion for finance, business, and investments. With a background in accounting, he revels in digging deep into complex topics to create elegant and engaging articles that inspire readers to take action. His works have been published on leading sites such as ThriveGlobal, INTStaffing, SellCoursesOnline, and more. These annual checks mainly cater toward regulatory and compliance requirements, along with reporting of performance to shareholders. Fusion Legal & Tax’s bookkeeping department ensures books are not only up to date and accurate, but also prepared in compliance with IRS and state regulations. This is to make sure that everything that happened in your bank account is recorded in QBO, and that everything recorded in QBO happened in your account.

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Before we jump into the essential bookkeeping checklist for small business owners, let’s quickly touch on why it’s so important to have a bookkeeping checklist in the first place. The IRS and most states require quarterly payroll reports and any remaining quarterly payments. Your payroll service provider should be completing and filing these reports, however you should be reviewing them to make sure they appear correct. Nowadays, a company’s bank feeds can be easily managed by logging in to a mobile app. So, it is simpler for bookkeepers to check bank statements in real-time and daily reconcile bank statements.

• For example, if you have recorded printer ink under stationary expenses, but you want to move it to consumable items, do that immediately because later on, you might forget.
• Once a month, go over your aged receivables and set up these email reminders so that you don’t have to worry about them.
• It can be set up to when each question was answered or request completed.
• You would just select when you would like the reminder sent (i.e. 7 days past due) and your software will automatically send the email reminder for you.
• Depending on how you compensate yourself, you may have to pay self-employment taxes on your income.
• Has your financial balance changed significantly from last month?

The next crucial monthly step is to collect the statements from the clients, including a bank statement, credit card statements, loan statements or other financial records. If this step is not already automated, you will need to collect these from your client or directly from the financial institutions if you have access. This can be very time-consuming each month and is necessary for completing the month-end reconciliation. Reconciling accounts is critical to ensure that no transactions are missed, and everything is recorded correctly. Particularly bank account reconciliation, such as for chequing and savings accounts to ensure all transactions are recorded.

Prepare For Next Month

Not sure whether to hire an accountant or keep your bookkeeping to DIY? Our article, When To Hire An Accountant For Small Business may have the answers you need. File Personal Income Taxes – Just like all taxpayers, you’re required to file a personal income tax return. Big 3 Financial Statements – These 3 statements are the most important financial statements for any business. Depending on your business structure, you may be required to keep a copy of these to meet record-keeping requirements. Again, any modern bookkeeping program should be able to help you complete them.

For instance, if your vendors offer early payment discounts, schedule the payments early to take advantage of them. Otherwise, set payment reminders so you can pay your bills on time and avoid late fees.

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Savvy Bird Consulting, LLC is not responsible for the implementation or outcomes this material may have. One simple tip to keep your business financials updated is to do at least one thing every week. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation. Given how tricky taxes can be, we always recommend hiring a professional to ensure everything is done properly. Review any unpaid invoices and decide what action to take from there.

It includes notes for things to talk to my client about and any questions I have about their books. Because of this, I reconcile my client’s savings account every other month or quarterly. I also just discovered this place with nice, helpful graphs for your client. I learned this from taking my QuickBooks Online recertification.

Task 1: Entering Checks

Make sure you gather all that information at the end of the year and have it ready to pass off to your accountant. A checklist can be helpful if you want to pass the bookkeeping responsibility onto someone else. At some point, you might want to pass your bookkeeping responsibilities onto someone else . Having a bookkeeping checklist makes it easy to train and onboard someone to take over your business bookkeeping—and gives them a concrete list of all the new tasks they’ll be responsible for. Closing the books at the end of the period is essential to transfer the “temporary” income and expenses accounts to retained earnings.

And, your calendar can help you avoid falling behind on your books. Before you completely close the accounts at month-end, consider having a second set of eyes review your work. The person reviewing your accounting information could be a manager or supervisor who has experience handling your books. When closing your books at the end of the month, record any payments related to your fixed assets.

Be sure that accruals and prepaid expenses are recorded accurately in your books. Chances are, you probably don’t have time to record transactions every day. If this is the case, make sure you write down your purchases and organize receipts. That way, you can keep your accounts payable in tip-top shape for your monthly close.

See For Yourself How Easy Our Accounting Software Is To Use!

There are plenty of choices when it comes to accounting software. The best option will ultimately depend on budget, desired features, and ability to integrate with other business software, such as payroll or HR programs. To help narrow your search, here’s our comprehensive review of the best easy accounting software for small businesses. If you’re looking for something basic, https://www.bookstime.com/ these free accounting apps may be up your alley. It may seem daunting to keep up with so many of your business’s financial activities throughout the year. It can be a lot to handle, but you can make it easier on yourself. Join forces with a professional outsourced accounting team to manage your bookkeeping services and keep your day-to-day accounting tasks on track.

Review Unpaid Bills From Vendors

The size and complexity of a business, as well as the tradeoff between time and financial resources are important considerations to deciding if a bookkeeper is right for you. Growing businesses in particular may find hiring a bookkeeper valuable so they can focus on other aspects of operations. A journal entry in the general journal should accompany any financial transaction made by a business. This provides a chronological record of a business’s transactions. Deposit Profit Sharing – If your business has a 401, you must deposit any profit-sharing from the previous year into employee accounts prior to the business tax filing deadline. In addition to the tasks you’ll have to complete each month, there are also some tasks you’ll need to complete each quarter.