Bookkeeping can become overwhelming and confusing at times. Follow these top 4 Best Practices to better assist in becoming a better bookkeeper.
First of all – if you have not already, upgrade your accounting file to QuickBooks Online. QBO offers a live banking feed that will link to your banking accounts and will automatically pull in your transactions every day. This feature is very secure and has been one of QBO’s best features. By doing that ensure that you are taking action on all your banking transactions. The feature will also create memories of past transactions and will auto-fill to the account previous transactions have been allocated to. Therefore this helps save time to better spend on your business.
This feature is only beneficial if you take once a week to go in and clear out any outstanding transactions that need to be allocated. If left untouched, the transactions can start to pile up and will cause you to take more time out of your day than you wanted. Remember, this feature is to allow you to be more efficient!
If your business uses the accrual method of accounting, make sure you enter in all bills when expenses are recorded and enter invoices when revenue is recorded. It is common in the business world for payments in and out to be late, sometimes a month late. Keeping track of all expenses and revenue will help create a better understanding on how your business runs, when it runs best, and where it can improve.
Keeping your invoices and bills up-to-date in QBO will help show a real time cash flow of your business that might not match what your bank account shows. This is a huge mistake in many businesses that pay by check. When you receive a payment for a bill, always open the bill and add a payment to the bill. This will help you better track any outstanding bills you have as well as keep a record of how much money you have to spend. The same with the invoices. When you receive a check or an ACH for an invoice, you want to add a payment to that invoice. This practice helps you keep accurate records of when you were actually paid or made a payment, not when the monies went in/out of the bank account.
When a payment is created for a bill, you are then able to “match” a deposit from the bank feed to that bill. This is a great feature and helps speed up the process of adding in your banking transactions. Hence good rule of thumb: for all bills/ invoices that do not “match”, you need to review why they do not match and correct it.
For More information on cash flow check out: Predicting Cash Flow
Become familiar with custom reports. There are so many reports you can create in QBO to better assist your view on your business. Here are a list of reports and best practices you should follow: