5 Practical Tips to Make Accounting and Bookkeeping Easier
Almost every business owner hates keeping their books. Business owners actually love the work for which they start the business, i.e. increasing sales, knowing what their customers want and trying to give them what they want and doing whatever that can help their business thrive, but bookkeeping might be the last thing they want to do.
However, it’s a fact that bookkeeping is important. And it has also a role to play in running your business smoothly. Bookkeeping and accounting services Singapore share here some essential tips that will help you keep your books properly without being tedious.
1. Do a Little Everyday
A large part of the tediousness of bookkeeping is due to the fact that since it’s boring you procrastinate and it goes on piling up to become huge at the year end. Instead if you record your everyday transactions daily, it won’t become so tedious.
Keeping electronic records also results in less work and also lower expenses. When you’d outsource your accounting to professionals, your neatly kept electronic records will be very useful to them.
Keeping records daily won’t take more than 10 to 20 minutes. Set aside these few minutes for this very important work.
2. Account Chart
An account chart is a chart containing transaction categories which are 5:
Each of these categories has an Account Code and is also called the ledger.
Such an account chart will help you categorise transactions when you’ll start bookkeeping.
3. Monthly Reconciliation of Bank Statements
Your bank statements are by far the only business record you can rely on. They are the base of everything else.
Assume that you began recording your transactions and at month end, you notice that your accounting records don’t match with your bank statements. E.g. you were expecting a cash of $5,500. However, there is only $5,250 as per your bank statement. Now you should find out its reason and that’s called bank reconciliation.
Some of the differences may be valid. E.g. you received a check at the end of the month and expected that sum to be added to the balance, but the bank will process it after 2 days and thus it will go in the next month’s balance.
But if there is no such valid reason, you’ll need to investigate. Who knows, it might have resulted from a wrong accounting records or even a fraud.
Thus bank statement reconciliations are typically the easiest but perhaps the most important step in bookkeeping.
Also, never dispose of bank statements. You can at least keep soft copies. If you need an old bank statement, the bank will charge around $30 to $40 per month. So, by keeping old statements, you’ll save money and keep away stress.
4. Electronic Storage of Transactions
Rental rates can fluctuate but digital spaces can only become cheaper. Storing physical documents is not only unwieldy but also unsightly to look at. And of course the documents take space and also fade over time.
Consider segregating documents that don’t need hard copies. Particularly those which don’t need any signatures don’t need hard copies. And you can then convert them to digital format and store them in cloud, like Google Drive and DropBox. These cloud storage solutions are even free for low storages.
5. Record Information of Relevant Transactions
You should record at least the following information of every transaction:
- A unique code: You can put a prefix with the kind of transaction. E.g. your paying bill may have a prefix like EXP001 and sales can have a prefix like REV002.
- Payee or payer
- Purpose of transaction
This information will be useful when a professional bookkeeping services Singapore will analyse your account.
Follow these tips to make your accounting and bookkeeping work easier and get a great peace of mind.