DIY Bookkeeping Best Practices

I was asked last week to do a post about DIY bookkeeping, and how to make it easier for a bookkeeper or accountant to take the reigns later. After thinking about it for a while I came up with a list.

If you want to do your own bookkeeping that is great, especially when you are first starting your business. When it comes time that you need financial advice, or to hand over the reigns to a bookkeeper or accountant, that decision could get pricey fast. So to save time and money there are some things you could do to ease the transition.

  1. Keep all records and organize them. Organize them by type, and month and date for each year and if you can get specific. For example: a bare minimum would be to organize all expense receipts together for January in order for the month. Do the same for Purchase orders, invoices, bank and credit card statements, etc. To be more specific organize what type of expenses. For Example: Organize all office expenses, vehicle expenses etc in their own organized folders by type, month and date in order. Doing this will make it much easier for an accountant or bookkeeper to sort through later
  2. If you can…keep digital and physical copies of everything. While this is not a requirement, it can be very handy. In the event of natural disaster, fire, flood, etc having an extra copy of your files to work from could mean everything to your business. All you need is either scans or good pictures, labelled and sorted as the physical ones are. I personally keep both physical and digital copies of everything. You never know when this practice could come in handy.
  3. Use accounting software. While spreadsheets are quite helpful, you get far more use out of accounting software. Accounting software will track your taxes, tell you how much is in your bank accounts, track your income and expenses and allows proper financial statements to be created. Financial statements becomes very important if you are applying for a loan, taking on a partner or deciding to sell your business. But really as long as you are somehow keeping track of income and expenses this is the most important part.
  4. Be specific in your accounting software. If you know how to add accounts to the chart of accounts, this would be in your favor. Once again, if you are doing it all yourself be specific. If you use 4 different types of advertising, create accounts or subaccounts for each expense type. Be specific in your “descriptions” of transactions as well. The more specific you can be the easier you will make it for an accountant or bookkeeper who is coming in to take the reigns later.
  5. Get advice. If at any point you are uncomfortable with bookkeeping, with a specific transaction, etc get advice. Reach out to an accountant or bookkeeper and ask a couple questions. Consult Quickbooks Online Q&A, Consult XERO Online Q&A, there are so many avenues to take. If you are ever uncomfortable or have questions its better to get information than to perhaps completely mess up your bookkeeping files.

There is nothing wrong with trying to save money especially during slow times or when your business is first starting. Make sure you keep detailed records, keep your paperwork in order and as I said above try to be very specific. Eventually if you choose to grow your business you are going to need a bookkeeper or an accountant. You will eventually want the time to focus on your business, and your family. You will eventually want advice on cost cutting measures, tax saving strategies, or how to put more money into your business to be able to expand and grow. Handing over the reigns is a natural progression in the expansion and growth of a business. As long as you are prepared for that and take care of your books properly, then your bookkeeper or accountant will be prepared as well.

Jocelyn Ruston


Cover Your Assets Books and Taxes

Published by coveryourassetsbooksandtaxes

I am a tax preparer and bookkeeper running my own company.

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