Bookkeeping is the back bone to every business. With that being said, bookkeeping can quickly become an incredibly hard task unless you follow these four simple rules.
1. Separate Business Bank Account
Have a separate bank account (and credit card, if applicable) specifically for your business. This is important even for you sole proprietors. Regardless of your business setup, this is vital.
If you are unable to get a credit card under your business name, make sure you dedicate one personal card strictly for business use only and use the payments to it as a reimbursement.
2. No Commingling
No personal expenses on the business bank or credit card account. In the rare occasion that you accidentally put a personal expense on the business account, record it as an owners draw or reimburse the business for it.
3. Keep Your Receipts
Store them in a file in your office or take a picture of them and save them in the cloud. This is vitally important in the event of an audit.
On each receipt write on it: who, what, where, when, why, and how much. Not only does this help backup the business purpose but it also reminds you in case you forget down the road.
4. Ditch the Cash
Cash is hard to track and prove. In the rare event cash is your only payment option, be sure to get a receipt so you can properly document the business expense.
Check out our episode on the Small Business Tax Savings Podcast regarding this topic!