Finances and accounting can be one of the most tedious and intimidating aspects of running your business, but it doesn't have to be. Chic CEO recommends talking with an accountant or CPA to make sure you are accurately managing your money. But even if you hand over the books to a professional, you should know your basics. Most small business owners use an accounting software like Quickbooks or Quicken for their bookkeeping and use a professional accountant to prepare end of the month statements and tax documents. A bookkeeping software will help you balance your accounts, prepare invoices, track bills, etc. As the business owner you are legally responsible for all business transactions and activities. Even if you delegate accounting duties to someone else, you should be deeply involved in all of the accounting details.
Choose a Bookkeeping System.
Whether you use a CPA or not, you will need the assistance of a bookkeeping software. There are many to choose from, so do your homework. You can read reviews online, head to Office Depot, Staples, etc. and ask for advice, or simply ask your CPA for suggestions. Once you decide on a software, get familiar with the program by following all tutorials and lessons. You can even find local classes that teach you how to become well versed in some of the more popular accounting softwares like Quickbooks. We like the accounting software already included in Chic Works.
Capture all of your financial data.
You will need to start gathering all of your financial data. Get this information together so you can enter it as well as keep an accurate paper file for your records. Sales receipts, cancelled checks, mileage reports, vendor addresses and prices, purchase orders, bank statements, etc.
Always enter in your financial data at the end of each day or every other day. Once a transaction has been made, record it as soon as possible. If a vendor’s info has changed, be sure to update your records so checks or invoices aren’t sent to the wrong address. Stay on top of all details and entries in a timely manner so you don’t fall behind. Keep all receipts and deposit slips filed by month to keep them organized. Even if they are stuffed into a ziplock bag that says October 2011 on them, it doesn’t matter, just keep them organized.
Ensure data validity.
Be involved in your books. Make sure that you are looking through them often and double check accuracy of entries. Be sure to look through your vendor list for duplication or false vendors. Fraud happens more often than not by employees creating false vendors and cutting them checks. Know your books.
Hiring or Outsourcing.
If you are just starting out but in need of assistance, you may find that outsourcing to an independent contractor is the best way to go before hiring on an employee. To get started with an independent contractor, you will need to have them fill out a Form W-9 tax form. To hire an employee, you will need to have them fill out a Form W-4 (make sure to check the IRS website for the most recent forms and for more information).