What are good bookkeeping practices?
Now that you’ve got a firm grasp on the basics of bookkeeping, let’s take a deeper dive into practicing good bookkeeping. There’s no one-size-fits-all answer to efficient bookkeeping, but there are universal standards. The following three bookkeeping practices can help you stay on top of your business's financial resources.
1. Consider a phased approach
Trying to juggle too many things at once only works to put your organisation in danger. If you’re looking to convert from manual bookkeeping to digital, consider a staggered approach. Overhauling all at once can be overwhelming and discouraging, so it’s best to take it slow and make meaningful and intentional shifts.
Those baby steps can help you manage your organisation on a new and improved bookkeeping system. Small steps also give everyone time to familiarise themselves with the new bookkeeping software.
2. Keep your general ledger current
A general ledger is a collection of accounts that classify and store all records associated with a company’s financial transactions. The general ledger includes balance sheet accounts (liabilities, equity, assets) and income statement accounts (revenue, expenditure, gains, losses).
Under the double-entry accounting structure, every business transaction will affect two or more general ledger accounts. General ledger accounts include:
- Asset accounts such as cash, accounts receivable, investments, land, equipment, and stock.
- Liability accounts such as accounts payable, accrued expenses payable, customer deposits, and notes payable.
- Stockholders’ equity accounts such as common stock, treasury stock, and retained earnings.
Your general ledger should be up to date, so your bookkeeping software should provide functionality that you can navigate easily. QuickBooks is an excellent option for novice and seasoned digital bookkeepers.
3. Plan for taxes throughout the year
Whether it’s updating your books or keeping in contact with your tax advisor, maintain your business’s financial records and business expenses. When it’s time to file taxes with the Receiver of Revenue (SARS), you can be well prepared. Without any hiccups or last-minute scrambles, you’ll be able to enter tax season confidently.