Consistent, accurate bookkeeping is critical to the success of any business. Besides saving money in taxes and helping to prevent audits, precise, organized bookkeeping prevents needless frustration and empowers you to make better business decisions. You never know when you’re going to need to reference your records, and convoluted bookkeeping can make that difficult or even impossible. Messy bookkeeping can also hide signs that your company is struggling, preventing you from making necessary changes. Additionally, poor bookkeeping practices can even lead to legal issues and steep penalties. Fortunately, there are easy steps that you can take to reduce errors and keep your books tidy.
Avoid Common Mistakes
Many problems associated with bookkeeping are entirely avoidable. You can be sure that once you’ve been penalized for one, you don’t make it again. For example, if you fail to accurately report your taxes to the Canada Revenue Agency, you may be hit with some steep fines or an audit. Filing reports to the CRA late can also cause you to incur significant amounts of interest or other monetary penalties. Of course, filing your reports accurately and on time is a no-brainer, but poor bookkeeping practices can make it difficult to stay on top of your company’s requirements and deadlines.
Master the Bookkeeping Program
Most businesses these days aren’t keeping physical books, although having hard copy backups is never a bad idea. Computers and bookkeeping software have made it easier to keep accurate, organized records but only if you know how to use these programs properly. More often than not, it’s not enough to simply read the instructions or watch a few tutorials online. Mastering accounting software is critical, as there are features and methods that may not be immediately obvious to the casual user. A good bookkeeper should already be well-versed in the accounting software your company uses. If your accountant isn’t confident using your current system, either get him appropriate training or switch to an accounting system that he’s already mastered.
Use a System of Checks and Balances
Ideally, you should be able to trust the employees who have access to your records. At the same time, you can never be too careful. A system of checks and balances prevents one person from being able to access or change the entire system. Messy bookkeeping doesn’t always mean fraud, but when fraud exists, it’s usually hidden by messy bookkeeping. Keeping your records neat drastically reduces the chances of fraud, and adding a system of checks and balances provides that extra level of security that lets you sleep well at night.
Yes, bookkeeping can be a pain. it is, unfortunately, an absolutely necessary evil. If you start to get sloppy, your problems are only going to keep snowballing. Implementing strict bookkeeping standards ensures that you never have to second-guess your records. Make sure every single receipt is accounted for, even if it’s just a minor expense. If an audit should occur, you must be able to back up every penny spent. Once you start being lenient with your bookkeeping principles, it becomes a very slippery slope. The best approach is to be meticulous and stay that way. Once you start following strict procedures, you find that attentive record keeping isn’t as difficult as you initially thought. Put the proper guidelines in place, and they become second nature.