Bookkeeping Basics

  • Maintain Daily Records. Allocate 15 minutes everyday to do a little bookkeeping each day. This is one of the most basic rules. If you don't have accurate records, you don't have an accurate picture of your business. There is no right or wrong record-keeping system. What matters most is that you have a record-keeping system and you use it.
     
  • Bank account statements. Always request a statement with a month-end cut-off date. This will make it easier for you to reconcile your statement and track expenses.
     
  • Keep an audit trail.The goal here is to be able to quickly and easily retrace your company's financial activities. Record all of your invoices and cheques in numerical order. Never skip numbers.
     
  • Be consistent. Consistency is the key to successful bookkeeping. Most of us tend to make things harder than they need to be. Keep filing simple and use consistent wording in ledgers and in software files. This will save you and your accountant time at year-end when you are preparing statements and reports.
     
  • Use a computer. Bookkeeping software makes it easy to track income and expenses, prepare tax documents and summarize your company's financial activities. Make sure that you are trained in the basics, even if you are outsourcing. Take the time to set up your financial accounts correctly from the start. Always ensure that records are backed up for safekeeping.
     
  • Cash or Accrual. Choose the right accounting system for your business. Cash accounting is much simpler - you count income when you receive it and expenses when you pay them. In the accrual method you count expenses when they happen, not when you receive or pay them.
     

Know your bookkeeping deadlines.