Updated: Dec 23, 2022
While the year is winding down, the time to be focusing on year-end planning and taxes is coming soon!
But that doesn’t have to be stressful. Bookkeeping can be a simple process when you know what tasks you should be completing daily, weekly, and monthly. When you are in the habit of keeping your bookkeeping up to date, then you won’t be buried when tax season comes around.
What bookkeeping you should be doing DAILY
There are a few simple things you can do every day to keep up on your bookkeeping tasks. When you do, it becomes a much less stressful task.
You should be entering your daily sales summary into your bookkeeping system. Suppose you are using an integrated point of sale system (like Shopify or another eCommerce platform). In that case, you can integrate it with bookkeeping software such as QuickBooks, Xero, Patriot Software, etc.
The integrations make it simple to capture the total sales, cost of goods sold, sales tax, and different payment types every day.
The second thing to do every day is opening and closing your registers and counting cash. This ensures that you have the correct amount of money and that you’re not missing something. It does occasionally happen the cash recorded the night before is different from what is in the register. When you compare it daily to the reports in your point of sale system and record those discrepancies (if any), you’ll stay on top of your daily sales.
The last thing to do every day is making deposits in the bank. You’ll need to deposit the cash and checks each day into your business bank account. Sometimes you can get away with making weekly deposits, but daily really is best, especially for large volume transactions.
What bookkeeping you should be doing BI-WEEKLY
First, you should be using the Profit First System in your business. That is the system that allows you to have a successful cash management system in your business. Every other week, you should be transferring money accumulating in your income account and transferring it to the appropriate accounts. Then make sure those are recorded in QuickBooks.
Sometimes a bookkeeper can take care of these steps for you.
Second, you’ll want to review your inventory, what you need to order, what you have on order, and what’s been received. You’ll review the amount of money in your inventory account, place new orders, etc.
Third, make a shopping list. When I need something in my business, I keep a shopping list and make purchases every two weeks. This helps you understand your inventory and what’s selling vs. what’s not. It also controls those spur-of-the-moment orders.
Fourth, pay your bills. Even if most of your bills are on auto-pay, a few usually require a manual payment. Every other week, you’ll want to double-check that all of your payments have been posted.
Fifth, pay your employees and yourself. Paying yourself is a vital part of owning a business and taught in Profit First. What’s the point of running a business if you aren’t getting paid? Once you run payroll, you’ll record those payments in your bookkeeping system.
What bookkeeping you should be doing MONTHLY
First, balance your checkbook, aka reconciling all of your bank accounts inside of your bookkeeping system. If your bookkeeping system doesn’t have a reconciliation feature, you may want to look at a different system for your business.
You’ll need to reconcile your bank accounts, credit cards, loan accounts, PayPal/Stripe accounts, etc. This will ensure that you and the bank have identical records of what has been paid and received. It also makes sure your bookkeeping is accurate.
Second, file and pay your taxes. Pay payroll taxes, sales taxes, state taxes, and federal taxes throughout the year. You’ll want to check with your CPA on when your taxes need to be filed each month, quarter, and year. Make sure you are recording those in your bookkeeping system too.
Third, review your profit and loss statements. You’ll want to check your expenses, income, and sales against the previous month and year. You’ll be able to see trends in your sales and expenses so you can make educated decisions regarding your money.
You’ll want to look for big ups and downs so that you can plan on the slower months. You’ll want to confirm things are categorized correctly as well.
Comparing multiple months will give you an idea of where you can shift your marketing efforts, when to launch campaigns, etc.
Many tasks need to be done with your bookkeeping every day, week, and month. But it doesn’t have to be overwhelming. When you have a system in place and stick with it, it makes the process much easier.
If you need help or more information: