Bookkeeping is a necessary evil that all business owners must face in managing their businesses. Making sure you keep accurate bookkeeping records allows you to always know who owes you money and who you owe money to. There are many reasons why you need to maintain up to date and accurate records:

You will need accurate records in order to prepare financial statements. Financial statements will provide you with crucial information such as what your company has for liabilities, assets and equity. They will also show you what your companys net profit is for a given period. You will need accurate financial statements if you ever wish to obtain a business loan or credit.

Good bookkeeping records will help you out tremendously when you prepare your taxes. You will want to make sure you are able to track all your companys deductions so that you do not end up paying in more taxes than you absolutely have to. Also, having well organized records for your accountant makes his/her job quicker, thus saving you money.

Allows you to determine if your company is progressing or not. If you keep good records, you will be able to determine which items are selling and where you may need to make improvements.

Allows you to determine which times of the year business is slower of faster. This will help you determine when you can afford to make any large purchases or when you need to order more or less inventory.

Should your company ever be audited, you will need to provide your financial records in order to verify all your expenses & income.

Should you ever decide to sell your business, you will need accurate financial records to show potential buyers.

Bookkeeping Record Checklist for Small Business

Sources of Income

• Cash register tapes with the following information

• Item purchased

• Price

• Amount paid

• Payment method

• Date

• Receipt books with the following information

• Item purchased

• Price

• Amount paid

• Payment method

• Date

• Invoices with the following information

• Item purchased

• Price

• Discount/sale price

• Customer name

• Date

• Credit card receipts

• Email records

• Copies of customers checks

• Deposit Slips

Expenses & Purchases

• Cancelled checks

• Cash register tapes

• Credit card slips

• Email records

• Purchase orders

• Invoices

• Check stubs for bills you pay

Paypal and other Credit Card Transactions

• Email records

• Separate register from your bank register (treat your Paypal account as you

would your bank account)

Bookkeeping Systems, Software and Methods

There are many ways to organize your bookkeeping records. Before deciding on bookkeeping systems for your business, you should take into account the size of your business, how many transactions you estimate you will create and how much time you have to invest in your record keeping. Some book keeping methods might be:

A notebook can be used to write in your daily transactions. This may work well for new businesses, but I would not recommend this book keeping method to businesses that generate a lot of transactions.

A ledger is a preferred bookkeeping system more by accountants than a notebook. You may wish to use a ledger in addition to an accounting software program.

A checkbook may also work well for new businesses. You should make sure to separate your business checkbook from your personal checkbook.

Microsoft Excel can be a valuable tool in setting up an bookkeeping system.

An bookkeeping software program will enable you to generate reports and financial statements with minimal effort on your part. Some popular bookkeeping software programs that seem to be favored amongst small businesses are:

QuickBooks: This is the program I use and prefer. It is very user friendly and easy to learn. There are a few limitations with the reports it generates, but that shouldnt be a problem with small businesses.

Tally 6.3: This is a popular program in India. It's very easy and user friendly. Of course, you need to have some knowledge of Financial Accounting to use it. It can also work in multiple currencies For eg. the INR (Indian Rupees) and USD (US Dollars). Apart from just the amounts, it also manages your Inventory/Stock.

Quicken: I like it and am sure I don't use it to it's full potential. But it does make it easier come tax time. I can easily compile information and pass it along to the lady who does my taxes!