Small business bookkeeping tips

Most new business owners cringe at the idea of keeping an accurate set of books. Unless you love to crunch numbers, the tedious task of accurate, daily accounting entries is an unpleasant thought at best. Despite the negative connotation that comes with accounting, it is truly a necessary evil. Without it, every business will fail. The financial status of a business can be clearly understood when an accurate set of books are kept. Disasters can be easily avoided by the company owner who keeps accurate accounting for his or her company. The financial health of a company can be saved or broken by the accuracy of its accounting. There is a simple yet powerful tool that can dramatically assist in the accounting process: the business bank account.

The #1 thing any new business owner should do is setup a business checking account. A business checking account is very simple to establish: visit your local bank and ask them for one! Most banks will require that you file for a DBA before they setup your account. If your bank does require that a DBA be filed before they can establish a business account, they can tell you where to file the paperwork. Be sure to ask the bank associate if they have a “fee free” option for new small businesses. If you discover that your bank doesn’t offer free business checking, then simply shop around. Spend a few hours and visit the other banks near your home or office. Ask them if they have fee-free business accounts. Eventually, you’ll find a “fee-free” bank. Also, be sure to ask for a debit card or bank credit card that is attached to the account.

There are several guidelines you should always keep in mind when managing your business bank account. The first is: never pay business bills with cash! Cash payments can be forgotten and they may never be entered into the expense ledger. Your business bank account is always your source for paying bills (as well as all deposits). Your bills should always be paid with a business check or business credit card. When you use a check or credit card, you are guaranteed a record of your transaction.

Another rule for the account: deposit all income no matter how small or insignificant. This includes any cash you received as well as any checks that were made out to you instead of the business. If you follow this simple rule, you will be guaranteed a record of your income. When it finally comes time to balance the books, it will be much easier to accomplish when your account has an accurate record of expenses and income.

The last thing to keep in mind is never pay for personal expenses with your business account. Managing personal and business funds from the same bank account is never advisable. Managing the books can be tough when mixing personal and business expenses. If a company has multiple owners, mixing funds can unnecessary cause tax and legal complications. If you simply don’t mix expenses, you will not experience any complications.

If you follow the above listed guidelines, your business accounting will be much easier. Every new business owner (and even those who have been in business a while) should strive to adhere to these bank account suggestions.

Article Source: http://www.109b.com/artdash

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