Our Best Tips for Balancing Your Books

Despite the importance of accurate, healthy accounting, business owners often overlook it, especially when managing and maintaining day-to-day operations. Accounting, however, should never be neglected because it can lead to issues for your organization. Accounting errors can hinder a company’s growth and make the future uncertain.

The keeping of balanced books is beneficial for many things, including forecasting. An annual report gives a clear picture of a company’s health and helps identify potential problems in advance. This information will help entrepreneurs and CEOs maintain balance in their books to position for growth and success.

Keeping track of receivables

Every business owner loves getting paid. But unfortunately, managing how a company gets paid is not that fun. Invoices are issued, and receivables are logged when goods are sold, or services are performed. An outstanding balance indicates that a customer owes money. Payments are applied to a customer’s unpaid invoice when they are received.

The concept seems so straightforward. That’s true. But, invoice tracking can be challenging when a company issues a large volume of invoices. In addition, reconciling customer payments later can be a logistical nightmare that leaves room for error. To keep the business books balanced, keep track of receivables, record transactions, and even consider switching to an automated system.

Organize receipts for expenses

Seeing a charge on a bank statement without evidence of what it is for isn’t a suitable method for tracking expenses. Tax, accounting, and cash flow issues can arise when you run into situations like this. Keeping receipts for all purchases is an easy way to prevent this. The effort may seem tedious, but it’s well worth it. Cloud-based software makes reconciling and reporting them much easier as well.

In addition to tracking major business expenses, travel expenses, entertainment/meal expenses, and client gifts must be properly logged and recorded. Maintaining accurate records in the future depends on thorough expense reports and stressing to employees the importance of keeping receipts.

Keeping track of cash expenses

Petty cash is essential to track during tax season to ensure accurate books. However, with cash, credit, and digital payment options, it can be easy for a business to lose track of how much money is coming in and going out.

A business can accurately calculate its overall profitability for the year if cash income and expenses are not neglected.

Maintain separate business and personal accounts

When it comes to small and medium businesses, it is easy for owners to mix business and personal funds. While occasionally dipping into personal funds to support a new company may not be harmful, having a business bank account is crucial.

This separation gives bookkeepers and accountants a clear picture of how money is spent and brought in. In particular, new and growing businesses should remember that business accounts should only be used for business-related income and expenses.

Keep an up-to-date chart of accounts

For a complete picture of a business, multiple categories are needed for all financial transactions. A business should track the following accounts:

• Accounts Receivable
• Accounts Payable
• Sales
• Purchases
• Payroll Expenses
• Retained Earnings
• Owners’ Equity

As a general rule, avoid “other” accounts that turn into places where random transactions are accumulated. These basic categories will result in clutter and a lack of organization. Businesses can provide even more detail by splitting main accounts into subaccounts to concentrate on specific types of transactions.

Join forces with Halsey Resources

As part of Halsey Resources, we help you control expenses, boost cash flow, and reduce the most typical accounting hassles while using today’s cutting-edge technology. In addition, we are here to help businesses having trouble managing their bookkeeping.

Contact us today to find out how we can help you!