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Tips for Your Small Business Bookkeeping System

Tips for Your Small Business Bookkeeping System

These Helpful Tips will Enhance Your Small Business Bookkeeping System

Tips for Small Business Bookkeeping –  A company’s bookkeeping services arm is one of its most important components. It is a key element of its profitability and long term success. All of the major components of an efficiently functioning business including accountability, legal compliance, productivity, and service ultimately depend on the company’s bookkeeping system.

This being the case, improving a company’s bookkeeping services will ultimately benefit the business as a whole. The following is a list of helpful bookkeeping tips aimed at doing just that!

• Keep Paper Receipts to Back Up Purchases

In addition to helping to ensure that all purchases and other transactions will get recorded in the company bookkeeping system, paper receipts are required as supporting evidence by the Internal Revenue Service. Paper documentation includes such items as sales receipts, invoices, deposit slips, canceled checks, time cards, brokerage statements and other things that back up entries in the company’s bookkeeping system.

• Build Relationships With Your Vendors

When certain items are regularly secured from the same vendor over an extended period of time, it may be advantageous to communicate with the vendor about such things as special pricing for long term customers or payment terms that would free up assets and increase cash flow. Pricing and payment options change over time and maintaining an ongoing relationship with repeat vendors will allow a business to take advantage of these changes when they occur. And when looking for card payment providers, compare their rates and fees.

• Weigh Depreciation Against First-Year Expensing

The tax code allows businesses to write off the entire cost of a purchase the first year it is put into service rather than depreciating it over the useful life of the property. This is the case as long as the total amount of the first year write-off does not exceed a set limit. Although first-year expensing can enhance cash flow by allowing a one-time deduction for the entire cost of an item, there are times when this is not the best choice. The advantages of first-year expensing should be carefully weighed against the advantages of depreciation. In general, depreciation should be used when the business is not currently profitable or when it expects to be more profitable in future years.

• Secure the Services of a Professional Bookkeeper 

Efficient and accurate bookkeeping services are a critical operating component of any small business. Precise and up-to-date records make it possible for a company to evaluate its profitability and to develop a long range financial plan. They are an essential antecedent to financial reporting, financial analysis and tax planning. Because the bookkeeping services function of a small business is complex, as well as being so essential to its overall success, it often advisable to turn this responsibility over to a professional bookkeeping services provider.

• Limit Access to Business Records

Although hiring a professional bookkeeping services provider is usually a wise decision, it is not prudent to give a third party open access to a company’s books without putting into place some system of checks and balances. Small business tax obligations are ultimately the business owner’s responsibility, making it important for the owner to keep a handle on the company’s bookkeeping system which defines these obligations. As an example, the IRS recommends that the employer’s address rather than that of an outside payroll services provider be used as the address of record on the company payroll tax account so the responsible party will be the one who receives notification if there is a problem. In addition, a system of checks and balances helps to prevent unnoticed errors as well as any type of fraud.

If your business is seeking an outsourced bookkeeping solution, the experienced professionals at Orange County Bookkeeping can provide you with the expertise you are looking for. Our licensed accountants and bookkeepers are equipped to serve businesses of any size, structure or industry focus. Visit us today at www.ocbookkeeping.com to learn more about our full range of bookkeeping, tax and business consulting services. Contact us by phone at 949.242.9852 at or by email at info@ocbookkeeping.com to receive a free, no obligation consultation.