Your New Year’s resolutions for your business could include starting and maintaining better-organized books and records. Keeping your company’s books organized and updated will help you make informed decisions in real-time. Following are a few easy ways, using Quickbooks, to maintain accurate and available information on your business’s performance throughout your fiscal year.
• Reconcile bank statements and credit cards monthly. Knowing how much cash and credit you have readily available is a critical to conducting business. For up-to-date records of balances, perform bank and credit card reconciliations monthly with Quickbook’s Account Balances feature, then reconcile them with your bank’s balances at month-end.
Not only will reconciling ensure the balances on your books match the bank’s, but the Balance Sheet accumulates and summarizes all your cash and credit card totals. Importing, categorizing, and reconciling these transactions each month will greatly improve the accuracy of not only your Balance Sheet but your Income Statement, so long as the transactions are coded correctly. For more information on reconciling, check out: https://quickbooks.intuit.com/accounting/bank-reconciliation/
• Organize a relevant numbered Chart of Accounts. To properly import and categorize your transactions, it is vital that you have a clean chart of accounts (COA)—that is, the accounts you use on the Balance Sheet and Income Statement are organized, relevant, and properly set up. Your accounts should also be numbered.
While you might employ many accounts, to be sure that you are starting or assembling your records properly, list each under one of five Quickbooks account Types: Assets, Liabilities, Equity, Revenues, Expenses. As you set up your accounts under these Types, create Parent and Subaccounts to help group your accounts on the Balance Sheet and Income Statement for a more harmonious order of accounts, which will make it easier for you to assess your business’s financial health.
To get started you might adopt the following list of commonly used numbered accounts:
Balance Sheet:
- 1001 Checking Account
- 1002 Savings Account
- 1101 Accounts Receivable
- 1201 Equipment
- 1202 Accumulated Depreciation
- 2001 Accounts Payable
- 2101 Credit Card
- 3001 Draws
- 3101 Retained Earnings
- 4001 Income
- 4010 Other Income
- 5001 Cost of Goods Sold (COGS): individual COG categories can be listed separately in the 5000 series
- 6001 Payroll
- 6002 Payroll Taxes
- 6003 Meals
- 6004 Entertainment
- 6005 Job Supplies
- 6006 Utilities
- 6007 Bank Charges
- 6008 Depreciation Expense
- 6009 Other Expense
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