Every small business owner or manager knows they need to keep an eye on their books; otherwise the wheels could fall off quick. Eventually, the bookkeeping tasks will be outsourced when either the revenue hits a certain level or the stress hits a certain level. Until that time comes, it makes sense to stay in tune with QuickBooks best practices. Making
sure that QuickBooks is being used as efficiently as possible will allow for a smooth transition to the new bookkeeper. I find that owners and managers tend to be really good a using QuickBooks for one or two things such as customer billing and tracking income while many other areas get neglected along the way such as Accounts Payable, reconciliations, financial reporting, etc. As these areas get neglected, business decisions may be based on inaccurate data. As bookkeepers, we like to make sure that our clients are making strong business decisions that are data driven. Nothing is worse than seeing an owner make decisions based on their gut feeling and inaccurate financials.
Use Accounts Payable
It's always tough for me to see a computer monitor surrounded by unopened mail. To me, this immediately indicates that the person in charge has no idea how much money is owed to vendors and their Accounts Payable is non-existent. Not knowing your business's cash flow can lead to serious implications. It makes sense to have all unpaid bills entered into QuickBooks. Once that step is done, the person handling the books needs to wrap their head around how to properly execute the Accounts Payable process, which can be tricky.
Reconciliation, what's that? It's not uncommon to hear this question. The answer is simple, the reconciliation process is making sure you book balance matches your statement balance. The statement balance could be a number of things, and not just your checking account. The checking account is usually the first account to be discussed when monthly closings are discussed. But what about all the other accounts? Company credit cards need to be reconciled, usually via the Online Banking Download tool within QuickBooks. Other bank accounts such as savings accounts, Paypal, IOLTA accounts, etc. all need to be reconciled. Car loans, mortgages, and basically anything else that carries principle and interest payments needs to be tied to a statement balance. Commission accounts, payroll liabilities, 401k, employee withholding accounts, sales tax accounts, etc. all need to be reconciled too. The list could be much longer, but I'll end it there to keep from rambling. Also, you won't have to look too far to find more QuickBooks reconciliation tips.
Utilize Financial Reporting
What's the point of spending all this time or money on your books if you aren't going to utilize it? Are you books just getting done because your CPA said you had to? Hopefully not. I would hope that a business owner would love to look over their financial reporting on a regular basis so they can gauge their company's performance and make smart, calculated decisions that benefit everyone with the company. If the goal each month is to hit a 15% percent net profit margin bonuses can be given out, then there better be a system put in place to track this number. This system should be dialed and be able to answer why or why not the monthly goals were hit. The topic of financial reporting has been written about a lot due to its importance. Here is a quick list of 9 financial reporting tips to tell you more.
Bookkeeping can truly help a business succeed. Usually, the books for a small business have to be done by the owner or the manager since hiring a fulltime bookkeeper isn't realistic. The next best option or maybe the best option in general, is to outsource your bookkeeping so your business can stay in tune with QuickBooks best practices. Doing this will help you reduce stress and allow you to be 100% focused on being a master of your craft.