This is Day 13 in the 31 Days to Become a More Efficient Virtual Assistant Series
Previous post: The Importance of Building Relationships to Grow Thrive Business Accounting Business
For reasons beyond satisfying your accountant and Uncle Sam each year it’s important to keep up with your bookkeeping so you can assess your income and expenses – really, how do you know if you are making money or spending too much on office supplies unless you have up-to-date, real time info?
Below are what I consider to be the most super-duper important things you can do that will eliminate some of the frustration you may associate with handling your bookkeeping:
- Perform your bookkeeping regularly (at least monthly).
- Don’t go overboard with your Chart of Accounts – the more detailed it is the more time and consideration it will take to decide what account to use.
- Have a filing system that is easy to use and access (make sure to retain records for the required number of years – IRS info here). Here is an easy to use and inexpensive filing system for paper receipts.
- Reconcile your bank statements upon receipt (there are some software programs that claim to be for “bookkeeping” but true bookkeeping requires checks and balances and the reconciliation process is one checks and balances step that is crucial).
- If you use QuickBooks enter your credit cards into QuickBooks. Be sure to also reconcile and credit card accounts.
- If you use PayPal frequently also add it as a bank account in QuickBooks (for easier reconciliation). Not sure how to record Paypal fees? Here is a post and video explaining how to easily record Paypal fees in Quickbooks.
- Minimize the co-mingling of personal and business funds.
- If you don’t use a true bookkeeping program, such as Quickbooks, you may be interested in purchasing this Google Document/Excel spreadsheet that I created to help see exactly where you stand financially on a monthly basis. I even have put together a short video explaining how this sheet works and can help you keep a closer eye on where you stand financially.
If you really hate bookkeeping (you’re not alone, many do!), outsource it to someone who enjoys it! There are virtual assistants out there who have a bookkeeping background and offer it as a service, even to other virtual assistants.
If you’re trying to get out of debt there are some additional things you will want to do. First, read this book, The Complete Guide to Money.
I first read the book on July 3, 2012. The next day I sat down and struggled, for hours, to create both a personal and business budget. It was an incredibly eye-opening experience and I realized that at my current rate of spending I was short approximately $700/per month. What an exciting way to spend the 4th of July!
In hindsight I wish I had recorded my debt obligations as of July 4, 2012 (so I could truly gauge my progress since reading the book). As of December 24, 2013 I am once again debt-free (the last time was before I hit my 30th birthday). In 2013 I paid off a total of $21,527.71 and I also repaid $6,000 of the $12,230 I had withdrawn from my IRA account to pay the IRS for my 2011 tax liability. What a huge turnaround from being $700/month short on income vs. expenses prior to reading the book and maintaining a monthly budget for both my business and my home.
All of the tips Dave suggests can make a difference, it just so happens I the sole action I took and implemented was with the monthly budgeting section of the book.
You can only make changes if you talk about money, even if that conversation only takes place with yourself. Being honest and realistic about where you are is the first step. (Does this sound a bit like AA?) As you work through things, if you’re in a place of debt, be sure to celebrate your successes and the milestones you achieve.
Many of us hate to talk about money but it is one area we really need to pay attention to and keeping on top of things regularly is part of that process. More importantly, don’t confuse bookkeeping as being the same as budgeting, because they are two entirely different beasts.
Here is the link if you’d like to purchase the Excel sheet and Google Document I created for Virtual Assistants to keep track of expenses, income, balance sheet items and credit card debt.