9. 5 Tips to Stay Organized with Your Bookkeeping

Bookkeeping

Aug 21

Welcome back to The Accounting Edit Podcast.
My name is Leah McCool with Orca Accounting.
And I'm Aminder Mann with Sequoia CPA.
Thank you for joining us for another episode about, specifically about bookkeeping, and just knowing a little bit more about what we would suggest as accounting firm owners to people who are doing it themselves.
So this episode is titled Five Tips to Stay Organized with Your Bookkeeping, and is really just going to cover an overview of five tips that we have to stay organized, and really just kind of get your own accounting process ironed out for your business.
Leah, just to start, I wanted to share a fun little tip here.
So according to an Intuit research study that was done, nine in ten small business owners actually say that their accounting professional contributes to their business success.
So I think it's really important to note that having someone on your side that's helping with the finances can really, really help your business not only thrive but grow.
And so I think it's really important in terms of understanding how to stay organized and then eventually leveraging any sort of support that you may need in your business side too.
Yeah, absolutely.
And in our last accounting bookkeeping series that we just covered, we really did dive into kind of the tangible aspects of how to really do the bookkeeping and understand a little bit more about bookkeeping yourself.
So this is really just an overview of, here's how you can use that information, but really just organize yourself with everything that you have just learned.
To start, so we have five tips.
The first one is setting a regular bookkeeping routine.
And what this tip covers is your routine should be something where you have time set aside on your calendar.
I know that a lot of people may procrastinate or even leave it till the end of the year, and this is something where we see all the times with business owners, if you make a time each month or week to handle it and maintain it, then you're just set up so much better by the end of the year, and you have a regular eye on things.
And so there's so many reasons why it can just be really helpful.
Yeah.
And I think staying organized, Leah, is really key for business owners.
I know there's a lot going on.
Us as business owners know this as well.
You're covering so many aspects of your business.
You're not just selling, you're also marketing, you're doing the accounting.
So it's important to stay organized and have that time blocked off.
Either it's on a weekly basis or a monthly basis, but you want to be checking in regularly with your business so you can ensure that your books are set up and that you're deriving decisions from that data and it's accurate.
If you're like you said, it's something that's slipping off the calendar and you don't know when the last time was when you logged in and updated your QuickBooks.
You can't use that information to make decisions.
And those decisions could be based off of incorrect data and that could lead your business arise.
So you really want to make sure that you're going in, being diligent and block that time, like you said.
Yeah, and if you have a calendar that you work with, then that's something where physically creating an event on your calendar, almost just like a little date with yourself, it can help make it more of a reminder where it's set in stone.
And there's other things that you can use.
So for my own business and just for my clients, I use a to-do list tool that just has the ability to schedule also time in my calendar, like it creates an event.
And so that at least is a good way if you are already using a to-do list app or some sort of project planner or management tool, then that could just be another section or project in it that you have set up.
So that could just be an easy solution you could implement.
But then there are also things that you can just do that are free or unpaid versions.
You could do anything from just having a to-do list in Excel or in Google Sheets, where it's just a simple spreadsheet checklist.
Or you could quite literally just write it on a piece of paper.
If you're more of like a paper and pen version, I personally kind of do like a hybrid approach.
But ultimately, having something that you can just refer back to just will help make that routine easier to keep consistent and implement each month or week or however often you maintain it.
So that is our first tip when it comes to staying organized with your bookkeeping.
And tip number two is separating your business and personal finances.
I know we've covered this before, but it's imperative that you separate your bank and credit card accounts from your business.
So you want to ensure when you're setting up your business that you have a separate set of bank accounts and credit cards that are used strictly for business, and your personal activity does not hit these accounts.
And this includes things like PayPal and Venmo.
If you have a personal PayPal or a Venmo account, you actually want to set one up that's just for business.
The more you can separate the business activity from your personal activity, it'll simplify your bookkeeping, and it'll make it easier at tax time to be able to understand what was actually part of your business and what was not.
And it reduces your audit risk, so you really want to be diligent about this.
Yeah, and I think that really until you get it completely separated, just keeping a consistent schedule where you're reviewing it, at least monthly will help it get, if you do have it intermingled, then obviously getting it not intermingled will be the first step, but then ultimately just making sure that you're keeping a running tab and you just have awareness over what is crossing over each month, that will help you just keep it separated as much as possible.
And if you're having someone else that you trust that is maintaining your books and doing your bookkeeping for you, then having that awareness on the personal side of what you're spending on business-related stuff will only help them understand how to treat that at the end of the year or at whatever frequency that they're maintaining your books.
That will be imperative to actually having an accurate picture in there.
So, completely agree.
Yeah.
And I know it's kind of difficult in the beginning because when you're starting off your business, you may not have all the credit cards, but like you said, Leah, as long as you keep those separate lists, especially if you're purchasing business items on personal credit cards or bank accounts, that list will be super helpful so that deductions are not missed when it comes to tax time.
So, like you said, it's really important to at least have some sort of list, even in Excel, to just keep track.
Yes.
Sometimes the simple is enough and just having a clear record.
It doesn't need to get more crazy than that.
So for our third tip, this is just using an accounting software or system that fits your business.
So there are many softwares out there that serve as accounting softwares.
We're just going to touch on high level what the most common ones are that we would recommend.
So softwares can include QuickBooks Online, Zero is we both use alternating ones.
So Aminder uses QuickBooks Online primarily, I primarily use Zero, and there are other ones like Wave or FreshBooks, or there's a couple other that I think are out there.
But QuickBooks and Zero, there's slightly different pricing for each one.
That's another aspect of just software that would fit your business is evaluating how much they'd be monthly or annually and just assessing that for your business.
Other things to consider are just different abilities, like tracking categories and inventory solutions.
And there's also, there's many aspects of it that we'll dive into deeper later.
But really just doing your research on each individual software, making sure that it has the capabilities to be able to fit what you need at the price that you want.
Yeah, and I think the pricing will also be dependent on the type of capability you're looking for, like you said, Leah.
So you don't always have to go with the highest subscription.
You can just look at if you need the basic setup, the lowest cost might be the best fit, and then you can always scale up from there.
But also ensuring that the software has the capabilities that you need, even around any sort of automating work, reducing the amount of manual work you're doing.
The reason that I like QuickBooks and I think you like Zero, Leah, is because of the ability to create rules and have some automation in the software so that it reduces the workload when it comes to month end.
For bank categorization, credit card categorization in the modules, it allows you in QuickBooks Online, at least it allows you to create rules.
And I would recommend that you don't create auto rules where it just pushes the data.
You wanna actually still be able to review the transactions coming in to make sure they're categorized correctly, but it allows you to create rules that items are flagged as certain expenses or as certain categories, so that at month end, you're not having to think about, oh, what was this item again?
Was this a subscription?
Was this a meal?
And so this allows you to quickly review your data and push it through, rather than going back and looking at all this information.
So looking at tools and capabilities, even of the software, is really important.
Yeah, absolutely.
QuickBooks Online has a function of rules and that automated solution that will at least serve as a guide for getting through transactions and categorizing them quicker.
And something that I really like about Xero is it does the same thing, but instead of having it, like you said, instead of having it just automatically push through, the ability to review at a high level and almost just bulk categorize transactions, where you're still reviewing it, but having a very direct approach to categorizing many at a time, it just helps cut that load down.
And that function in Xero is called cash coding, and it's a cash coding tab in the reconciliations area.
And so that is just really good if you have a high volume of transactions, if you have the same subscriptions or vendors that you have over a recurring month, then it's typically for the same software subscription or whatever.
So there's so many tools that we can dive into later on a software specific episode, but just making sure that you research different sort of features that each has and seeing which one you think will be a good fit for your business at the point of time that you're in.
And I think if you don't use a software, that is definitely something that we recommend.
But I would say if you are not at that point where you want to invest the money, then using a spreadsheet would be a very beginning level way to record what is happening in your business.
Typically, I'd recommend this to someone who has a very low volume of activity and transactions that happen every single month.
The reason is that because there's less going on, then there's less to manually keep track of.
And so the risk of having disorganized data is lower in that stage.
But then as you scale, obviously, there's more stuff going on.
So then shifting to a software is probably worth the cost at which you would pay every single month.
100%.
And now moving into tip number four.
It's organizing and actually digitizing your receipts.
So this is one of those areas that sometimes gets overlooked.
Being able to have all your receipts in one place, you can put them in a file folder, QuickBooks Online allows you to actually, in their app, take a picture of the receipt.
And so you could, and it pushes it directly onto the platform.
So this is really important because you wanna keep track of all your receipts for tax purposes and for audit readiness.
So you wanna make sure if any purchases you're making has some sort of documentation of the purchase so it can be traced back.
And there are so many different types of apps that you can use to help with this audit readiness aspect of your business.
Aminder mentioned that you can use just like a simple file folder.
Having that is better than nothing.
Having some place where it's stored, maybe not a grocery bag full of receipts that you have physically.
That would probably be maybe the most minimal amount of receipt organization that you could have.
So that's where digitizing it through an app, even if you're just taking a picture of it in your phone, uploading it to Google Drive or a file folder, that would be a really good first step.
But then also Xero integrates with a software called Hubdoc where it also stores information on receipts and has that picture.
And then also there are softwares out there that are paid, but one is called Dext, that there is a feature where it will pull information from the receipts and kind of have that same storage and integration bit.
So there are many, many different ways to do it, but the important thing is that you just have that in the beginning.
Yeah, you don't want to show up to your tax account at year end with a shoe box full of receipts.
They will not love you for that.
So anything but that.
Exactly.
And how easy is it to just take a picture of something and just even if you just have a folder in your phone, like an album in your phone of it, I mean, that is much better.
Maybe not too much better, but that is much better than just having a shoe box.
Oh man.
Okay.
So then the fifth tip that we have is just kind of uses all of this and wraps it up is reviewing your financial reports regularly.
Just do your routine of checking your profit and loss, checking your balance sheet and cash flow statement.
Monthly is always best and there are so many important takeaways for if you're looking at your reports on a monthly basis.
Just looking for any trends or red flags, especially are caught more frequently if you're obviously checking your books more frequently.
And also just keeping an eye on any sort of AP or AR aging reports to make sure, okay, here is what is due or I am owed and making sure that you're not letting those drag on too long and letting that revenue or bills get out of hand.
Yeah, and this allows you to take more of a proactive approach in your business rather than reactive.
You can make decisions for the upcoming month if you know, oh, I have X amount of invoices that I have to pay in the following month.
You can monitor your cash flow a little bit closely and be able to track this.
So I think it's really important to check in on your financial statements so that you know where you're at at month end, and then you can drive your decisions from that data.
So again, this is good practice and to incorporate into your regular bookkeeping routine.
And if you're unsure, if you're seeing things on your books and you're unsure of what it is, it's really good to partner with someone at that point, or even if it's just checking in with someone for a one-time consultation, say, hey, I've been doing my books for the last six months.
I'm running into these issues.
Can you help support here?
And it doesn't have to be on an ongoing monthly support if you're not at that point yet.
But you can definitely get some insight and support from someone like myself, like Leah.
If you have questions, that's what we're here for.
And if you are at the point where you're looking to offload a lot of this work, it's great to partner with someone who can provide these insights for you on a monthly basis and can help make those strategic decisions.
And a shameless plug for Aminder because I support her there.
She is currently offering a one-hour QuickBooks online review where she will help people who are service-based business owners, making sure that their QuickBooks are set up correctly and just reviewing any errors or inconsistencies, giving them some clarity and who want some expert input without officially committing to ongoing recurring support, which is always something that you can grow into with her.
So I just wanted to throw that in there because I didn't know if you were going to say it.
So I was like, I want to shout it out.
Thanks for that, Leah.
And I currently don't offer those consultations, but that obviously is something I could do in the future.
But yeah, definitely just something that is helpful with QuickBooks online.
I know that if you're doing it yourself, there's oftentimes can be stuff that you mess up that you're not even aware about.
And so Aminder can help with that.
So for sure.
That's what we're here for.
Yeah.
Yes, exactly.
And so just to wrap this up, just to cover them again, first tip is setting a regular bookkeeping routine and just blocking that time out so that you have it covered.
Second is separating business and personal finances and getting that separated as soon as possible, but then keeping accurate records when it comes to any business related spending on personal or vice versa.
Three is choosing an accounting software that fits your business, doing research on the features and the price points and making sure that works for you long term.
And then four is organizing and digitizing receipts.
High level, just stay away from the shoebox, but that at a minimum will probably be your good starting point, but maybe take a look at what we said specifically to help you get away from that.
And number five is just reviewing your financial reports regularly, checking on your financial statements so you can have a proactive and not reactive approach.
So definitely all items that we can talk more about in future episodes, if you guys have any questions.
And in the meantime, we can put some links in the certain specific softwares or websites that we use so we can have that list that we talked about so that you can use that as a reference.
And we will put that in the show notes of this episode.
And hopefully this was helpful.
We'll see you next time.
Perfect.
Thank you guys.
See you next time.
You've been listening to The Accounting Edit, a podcast by Aminder Man of SequoiaCPA and Leah McCool of Orca Accounting.
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Does your business need help on the accounting side of things?
We would love to help you.
You can find Aminder at sequoiacpa.com or on Instagram at SequoiaCPA.
You can find me, Leah, at orcaaccounting.com or on Instagram at OrcaAccounting.
We'll be posting new episodes every other week, so be sure to follow so you don't miss out.

Summary

In this episode, Aminder and Leah discuss five essential tips for staying organized with bookkeeping. They emphasize the importance of establishing a regular bookkeeping routine, separating business and personal finances, choosing the right accounting software, digitizing receipts, and regularly reviewing financial reports. These practices are crucial for effective financial management and can significantly ease the accounting process for business owners.

Takeaways