Seven Great Bookkeeping Secrets

"If You Can't Measure It, It's Not Real" - this was financial advice that Henry Ford used in founding Ford Motor Company at the turn of the last century, and it's the fundamental principal of accounting. Accounting is one of those disciplines that a lot of small businesses (or home owners) never quite knuckle down to - it's boring, it's tedious, and most people have only the vaguest idea where their money comes from or where it goes to, so accounting is usually a shock (and an unpleasant one) to them.

In the world of business, Accounting is like chess. None of the things you do with your accountant will 'win the game' for you. All of them can keep you from being forced out of business. With that in mind, here are a selection of winning plays.

1)Keep good records. In accounting terms, this is 'keeping an audit trail". Every invoice you get should be stamped, dated, and filed, along with when the payment went out and was received. Most good bookkeeping software will help with this.

2)Keep a good calendar. The IRS demands certain items of information every year at quite specific times. Your vendors and customers expect to be paid on time. Use whatever email solution you have - Outlook, or google or yahoo mail, to send you reminders three days before a bill is due to be paid.

3)If you can, automate. A lot of regularly occurring bills (like rent, monthly tax assessments, and utility bills) can be automated, so that they deduct from your account every month without you having to think about it.

4)Physical backups of all records. If it involves money, get two copies, and file them. One set of file boxes stays at the office. The other set should stay at your home. While you're at it, do the same thing with weekly backups of your other accounting data.

5)Plan ahead. One of the hardest accounting rules to abide by is the most sound. Live on 90% of what you earn and bank the rest in an interest bearing account. This applies just as rigorously to a small business; this forethought and planning makes the hit of quarterly estimated taxes a lot less painful, and gives your business a cushion to ride out dips in the economies, or a cycle of customers who are slow on their payments.

6)Know your consumption rate. Whether it's tool and die gear or paperclips, your business runs through a certain amount of material each year. Keep track of this and see if there are ways you can reduce expenses (either by reducing consumption) or by buying in bulk, or buying on a regularly scheduled contract.

7)Contact your accountant early. Your accountant is like a doctor for the financial health of your business. Just like you go to your doctor for regular checkups, you should go to your accountant quarterly (and possibly monthly) to look over your books, and look for ways to reduce your tax liability. Going to your accountant just at tax time is the financial equivalent of going to your doctor only by ambulance with a heart attack.

Loretta Valero-Smith owns and operates the leading
Boca Raton and Florida Accounting company . With over twenty years of experience, they have the reputatoin as bullet-proof accountants in the areas of florida small business accounting and
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