Simple Tips to Organize Your Records for Accurate Bookkeeping
Organizing your records is one of the most essential tasks for accurate bookkeeping. It allows you to understand what to keep and what to discard, and what to find where, without losing your head. There is such a lot of paperwork in your business generated every day that it can easily overwhelm you if not kept organized. Here are some tips on how to organize your documents.
How you store files can decide your ability to find something when you want it. Usually a professional Singapore bookkeeping firm, for example, uses four methods to store accounting files:
1. Three-ring Binders
Three-ring binders are normally used to keep your general ledger, chart of accounts and journals. Even though a computerized accounting system is used, keeping a hard copy of this for the most recently closed month and the current month is a good idea in case your computer system fails and you are in need of quickly checking the details.
2. File Folders
File folders are used to fill invoices, details about individual employees, like payroll-related forms, payments, contract information about vendors and details of individual customer accounts.
3. Expandable Files
Expandable files are ideal for organizing vendor activity and outstanding bills. There are alphabetical expandable files available too for organizing pending vendor invoices as well as purchase orders. For organizing outstanding bills you can get 30-day and 12-month expandable files.
If you use a computerized bookkeeping system, you can avoid using these files and install a bill pay reminder system in your accounting system.
4. Media for Storing Backup
If you store books in computer, be sure you make minimum one backup copy daily of all your data and store it in a secure place, where it won’t be destroyed in case there is a fire.
When to Keep or Remove Papers
You experience that it takes no time to accumulate a lot of paperwork and feel short of room to store them all. Thankfully, you don’t need to keep everything forever. As a rule, anything connected to tax returns should be kept for minimum three years. However, after three years, the IRS cannot audit you unless it smells a fraud. Thus, you can remove all your papers once they become four years old.
An exception to this is employee records which you cannot remove until the employee leaves your company for minimum three years. The limitations or statute for most actions that an ex-employee can file is three years after leaving.
Another exception is some sensitive data like any information about assets held by the company; it must be kept. Any information related to pending legal issues should also be kept.
It’s a good idea to check with your attorney and accountant before you destroy your old papers and make sure you are not removing anything you might need later.