How To Improve The Organization Of Your Business's Books
Posted by: Brookside Admin
If you're struggling to keep up with accounting for your business, the first step is to critically assess your organization and bookkeeping. If there are flaws and inconsistencies with how your files and paperwork are organized, you can't expect to be able to efficiently and accurately keep up with your business's books. At Brown Kinion and Company, we offer a variety of services for business, including Quickbooks Pro consultations and help with with bookkeeping. A post at Dummies.com offers some tips for how to improve organization in order to make accounting easier.
- Paper or Digital
In the past, one of the main obstacles in organizing your accounting department was what to do with all of the paper. Every transaction produces at least one piece of paper and then there are employee records, tax files and more. Now, you have the option of storing much of that information digitially, but should you? Keeping organized computer records is a great way to save on space and it makes accessing files much quicker, but you shouldn't completely abandon hard copies. If your computer system goes down, or you lose access to files, you'll want backups available. Regardless of how you choose to store files, it's always a good idea to have more than one copy.
If you want to stay organized, you'll need an effective plan in place for how you'll store files. That means implementing the right storage container for the right files. For example, three ring binders are great for your general ledger and other documents that can be dozens to hundreds of pages long. Many businesses will store this same information digitally, but also having it organized in a binder allows for quick access at any time. File folders and expandable folders can be used to organize other paperwork and stored in boxes, if you won't need to access those documents often, or file cabinets. Even if you store most of your files digitally, you'll want to create regular back-ups and store them on a thumb drive or external hard drive. Be sure to store these back-ups at another location or in a fireproof safe to protect them in case of disaster.
- What to keep
Another common issue for accounting departments is how to decide when it's acceptable to throw out files. While employee records typically have to be kept for at least three years after the individual leaves the company, there are other documents that can be disposed of regularly. Anything related to your tax returns can generally be tossed after three years. That's the typical statute of limitations for an audit so if you haven't heard from the IRS within that time period, you're safe. However, that doesn't necessarily mean you should throw out all documents related to your tax return when they turn four years old. Potentially sensitive information is usually best to hold onto indefinitely as is information on any holdings and assets still kept by your business.
Organization is key for the success of a small business. It's also important for any individual in order to have the proper records available each year for tax time. For help getting organized and improving the finances and accounting of your business, call Brown Kinion and Company.