04 Dec Bookkeeping Basics: Getting Organized
The key to being organized with your business money is to start with a bank account and credit card that you use only for business transactions. This way, you are getting organized in the moment you are buying something. It is in this moment that you decide if the purchase is for business or for personal. If for business, pay for the purchase with a cheque, debit or email transfer from the business bank account, or with the business credit card.
Bookkeeping Buckets to Sort & File
Exactly how to organize your records will vary from one bookkeeper to the next. A preferred option is to sort and file the documents in physical or electronic form in a monthly bucket, which includes the following buckets:
- Purchase receipts paid by business bank account
- Purchase receipts paid by business credit card
- Purchase receipts paid personally (By any means other than the business bank account or credit card)
- Customer invoices
- Bank deposits – ATM slip, or deposit slip indicating who made the payment you are depositing
- Statements – Bank and Credit Card
- Miscellaneous – Anything you think might be of use to the bookkeeper, or you have a question about, and does not fit into any of the other buckets.
Benefits Beyond Organization
In addition to helping you get organized, the benefits of having a business only bank account and credit card are as follows:
- Your bookkeeper can make sure that all the transactions on the bank statement and credit card statement have been recorded in your business financial reporting – even when a receipt gets lost.
- Your business records are clean in that they include only business transactions, rather than a cluttered combination of business and personal. This cleanliness makes your records much more auditor friendly. This may motivate the auditor to be friendly and make the audit process as stress-free as possible.
Can You Use Your Personal Accounts for Business?
It IS actually okay to use a personal credit card for business only transactions. We know it can be difficult to get a business credit card when your business is new. So, using a personal card is a great work around to this typical challenge. Be sure to use the same business accounting practices though, to keep your personal and business transactions separate.
If you have any questions about getting your records organized, email us at firstname.lastname@example.org to schedule a telephone, or in-person, appointment to discuss with Christine.