What are the best practices for maintaining books and records?
I have been working on a startup on the side and am incurring expenses. I have not set up any accounting software or record books and realize I need to start. I don't have a lot of expenses so don't want to do anything complicated, but I do want a simple way to track expenses and keep my files organized. What have others done?
Choose accounting and payroll software that generate records. Most accounting software can generate customer invoices. The software should also automatically help you with the bookkeeping basics, like recording accounts receivable when you bill a customer.
Business to Business relationships are crucial for accountancy practices for a number of reasons. We recommend that any accountancy firm should develop meaningful relationships with a number of other businesses who are deep specialists, able to assist the practice with their particular areas of expertise when required.
By utilising such specialists, the practice gains three distinct benefits. Firstly, they are safe in the knowledge that these specialists are appropriately experienced and qualified to assist with complex and often contentious areas of work that the accountant themselves would not be comfortable in handling alone.
Secondly, the firm can concentrate their time on what they do best – providing a first-class accounting service to their clients. This is their area of expertise, the service that they are confident in delivering.
Finally, these are mutually beneficial relationships, where the specialists often refer clients through who require accountancy services, meaning more clients for the practice.
I'm a big fan of Freshbooks.com - easy to use, free up to a point, it does plenty!!
Also - Keep a mileage log (list) in the vehicle. Enter date, where to, why, odometer when you leave and return from your business and the difference on each line. Home is start and return if home-based. If business has another location, all mileage is recorded from business address. Two ways to deduct auto expense. Ck rules at IRS.gov.
The best thing I ever did was hire a bookkeeper, who installed Quickbooks and has used it ever since. Worth every penny, hands down. Especially come tax season! Everything is right there, organized and ready to summarize for tax returns!
Many of us are rushing to advocate Excel. The best practice is to keep accurate records that allow you to quickly answer any question you could imagine your tax authority asking and to quickly retrieve any supporting evidence.
To make my life easier, I have created a spreadsheet that numbers each expense item on a line, and allows me to enter the expense amount into one of several columns, each denoting a type of expense. The column headings that I use match the classifications of expense types set out by my (UK - HMRC) tax authority. This makes it easy for my accountant (and for me in the early days) to total the columns and fill in my tax.
Where I have doubts about the right column, I put a comment in the box detailing the precise nature of the expense, s my accountant can review it and reallocate if needed.
At the end of each row, I enter a unique reference number, which I write on the invoice or receipt. Quarterly (when my UK VAT return is due) I arrange all of my receipts in the order of the ref number and staple them.
I have separate sheets for travel expenses and for my income. Over the years the sheet has evolved, but has always allowed my accountant to work quickly and keep costs down.
I cannot see from your profile where you are from Bryan, but if a UK-based s/sheet is useful to you, DM me with your email address and I'll send you a blank version.
If your records are reasonably simple or straightforward, You will probably find Excel adequate to serve your needs.
I agree with Pauline Green, I would recommend you buy QuickBooks Pro and start tracking your expenses and investments in Assets now. It will put you ahead of the game by recording your transactions from the start, and QuickBooks is very user friendly. I have FREE accounting templates on my Bud's Practical Accounting website. Go to the following link for the free downloads, http://budspracticalaccounting.com/resources/free-downloads/
RG Bud Phelps
I would start out on QuickBooks ASAP. You can use the online version for a small monthly fee (This is great for keeping backup records if your system crashes) or purchase a 2013 desktop version for under $100.
There are many advantages to using QB right out of the gate. It will track expenses and revenue, calculate sales tax and keep all your activity records nicely. Having this up and running to start out with makes life easier for Tax season and you won’t have to go back and input the data later.
QuickBooks offers templates for Invoices, Estimates, Sales Orders and can keep your Customer, Vendor, Employee records as well. This can give your start-up that professional feel if you want to add logos.
You can also export out to multiple tax software and you can import bank statements and invoices directly to the software.
I would recommend getting organized as soon as possible and this is a great way to start.
You should consult with your business attorney, your accountant and your bookkeeper. Set up an accounting and file system for your business and get it right the first time, not when it is tax time. Quickbooks is the industry standard but for a start up, Quicken for business can work well to get you started.
These are areas where you need professional advice from a true professional in the field. Don't take someone else's word on what to do.
I am not a business attorney, your accountant or bookkeeper. I am an executive coach. These are things I deal with all time in working with start ups and small businesses.
There are a number of bookkeeping tips posted on our blog. You can find them online here: http://www.fbc.ca/search/node/bookkeeping
I also agree with Daniel about using an Excel sheet. You could also use Google sheets, and if you do, you can use IFTT (https://ifttt.com) to automatically put any receipts into the Google sheet., Your "recipe" for If this then that is "add receipts, orders and invoices to Google Drive. I tested it out recently by adding new Twitter followers to Google Drive and it worked great!
If yoiu don't mind me asking, what type of business have you launched? That affects the advice I will give you.
When you are starting out Excel is a great option for keeping track of expenses. As soon as you get some sales traction, I would suggest that you get your bookkeeping set up properly. Quick Books is the most popular system for small business. You can either do your own bookkeeping by purchasing a licence or pay for a bookkeeper to complete on a regular basis. In the meantime, be sure to keep all your receipts in an organized way so that you track what you have paid out. It's smart to start with good organization of your finances.
I support Daniel, use Excel.
To add on, use excel to keep partial basic books
1. Sales Day Book
2. Purchase Day Book
3. Cash Book
You can pass the above books to the accountant prepare financial statement for you subsequently.
I work in Excel. There are many good and free accounting programs as well. To suggest a couple: