For many business owners, staying on top of your books can be a full-time job. Whether you do your own bookkeeping or outsource this task to someone else, it's important to stay in the know about how your company is doing financially. If your books have become disorganized, haphazard or out-of-date, here's how to fix them.
Assess The Damage
Your first step in getting your books in order is assessing the damage. Pull out a notepad, and make a note of everything that needs attention, including mistakes, incomplete entries or unpaid invoices. Make categories, and break every task down into smaller mini-tasks. That way, when it’s time to get to work, you're not overwhelmed.
Gather Essential Documents and Information
Once you've created your to-do list, it's time to gather everything you will need to complete the task. Pull together everything that's required to get your books up-to-date, including bank statements, passwords, invoices, checks, deposits and anything else that needs to be completed, copied, paid or filed. Organize each document or file into piles, according to category or month, and then label each one with a sticky note.
Start with your bank statements. Gather all supporting documentation for each bank transaction, and input each of these items into your system. Make sure the balance you come up with matches what each bank statement shows. Working month by month makes it much easier to spot a mistake without having to go back and rifle through a year's worth of receipts. Once your bank statements are all reconciled, make note of any outstanding invoices, check deposits or other financial transactions. Additionally, make digital copies of every invoice, every receipt and every document that will become a line item. Once scanned and saved, consider shredding the physical copy to cut down on office clutter.
Create a New System
Once you've gone through the hard work of putting your books back in order, you don't want to have to ever play catch-up again, so it's important to have a system in place for keeping your books organized. Think of how you want your invoices to be paid, what types of financial reports and information you need, how often you need these documents and important monthly deadlines. Each business is different, and what works for you might not work for someone else. Therefore, it's important to take the time to put together a unique set of rules and guidelines that best suit your business model and goals.
While it's not the most exciting task in the world, managing your bookkeeping can make many other aspects of your business run smoother. It's important for your books to be clear, accurate and up-to-date to provide the necessary insight about how your business is doing financially.
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