When you first started your small business, it’s likely that one piece of advice you were given time and time again was to keep a record of everything, particularly if it related to your finances.
Although you will no doubt record everything that comes in and out of your business account – as well as keeping any relevant receipts and invoices – in some way, if you’re not recording and managing them properly, when the time comes to do your taxes, it’s going to take you weeks to get your head around it all.
Fortunately, with a simple spreadsheet (which like the like invoice in last week’s post How To Create An Invoice, is divided up into just three sections), you can ensure that your small business accounts are organized in such way that you can look at everything quickly and easily.
Date: when did the money come in or go out?
The simplest part of the spreadsheet, whenever you make an entry into your accounts, you should start by putting the exact date of the incoming or outgoing amount.
The type of business you run depends on how you should use this – if you’re a retail company, it might be best if you record the actual day, using one sheet to cover each week of the month.
If you’re a service based company that generally only spends and receives money once or twice a week, it might be best to use one sheet to cover a full month, breaking down this section to simply say ‘Week Commencing’, followed by the date.
Either way, this column should allow you to easily distinguish when money came in or left your business account.
Details: what was it for?
Simply put, you want to place complete and concise details of what the amount is for in this column. If you’ve got an invoice, you could place the invoice number here. If you’ve received a check, the check number may suffice. If it’s something a little more complex, however, such as for a new computer, printer and software, you’ll want to detail this exactly.
Amount: how much was it?
In this column, you need to put the exact amount of money that’s coming in or going out. Nothing more, nothing less, just the amount of money that relates to the sale or purchase.
At the bottom, it’s worthwhile having the total amount of money that was turned over, both for quick reference and so you are aware of how much money you should be carrying forward to next week’s / month’s accounts.
And aside from the fact that you need to keep the paperwork to go with each individual record and you should always keep a backup on separate computer to the one you use primarily, that’s it.
Small business account management can be something which is time consuming, laborious, tedious and extremely frustrating if you don’t keep up-to-date and accurate records.
If you do keep records that are of a high quality, however, you can look forward to being a particularly organized small business with accurate accounts that you can refer to any time you need.
Note: This article was originally published on September 7, 2010.