Every business, no matter what size, needs to have a bookkeeping system in place in order to grow and be successful. A well designed bookkeeping system allows business managers to monitor the financial health of their business and to react to market and industry conditions. Have you considered what goes into a well-designed bookkeeping system?

Even the simplest bookkeeping systems should contain the following practices:

• Create a practical chart of accounts that is neither excessively detailed nor generically limited. Since a chart of accounts allows a business to categorize funds that are received, retained, invested and paid, it is imperative that the accounts used are understandable and convey important information regarding the business.
• Reconcile bank statements so you can easily spot differences between your bank statement and the bookkeeping records. Regular, timely review of your book balances with third party records allows you to identify erroneous banks fees, duplicate checks and incorrect postings of transactions as well as spot embezzlement activities such as forged checks and fraudulent vendor payments.
• Properly classify workers as either employees or independent contractors. Each worker’s classification determines what taxes need to be paid and what paperwork needs to be filed with various government agencies.
• Maintain daily records in balanced accounts so you can monitor available funds and verify that sufficient capital exists to cover business expenses (i.e., manage cash flows). When records are updated daily, the risk of error is reduced.
• Maintain an audit trail for all business transactions by retaining either physical or electronic copies of business receipts and invoices. If a business is ever audited by a taxing authority or regulatory agency, the burden of proof lies with the business; keeping copies of all transactions allows the business to prove their case.

As businesses grow the need to outsource all or parts of the bookkeeping system becomes common. Professionals like those at Flexible Accounting Services of the Triangle are experts in their field and can help streamline this process for growing businesses and develop this process for new businesses. In either case, the result is accurate, timely financial information that helps management avoid costly mistakes.

Contact Flexible Accounting Services of the Triangle today and let us design a practical bookkeeping system for your small business so you have all the financial information you need to manage your business successfully.