Are you one of those people who are guilty of just stuffing your receipts into a folder and thinking 'I'll sort that out when I've got time'? Do you need a more organized bookkeeping system, nothing too flash, just something that's simple and easy to manage?
Follow my tips below and you'll soon have that simple and easy-to-manage bookkeeping system that won't bring you out in a cold sweat whenever you hear the words 'tax return'. And I promise you, it works!
1. Gather your supplies!
Get hold of a large ring binder, divider cards, A4/letter-sized paper, stapler, pen, all your business receipts and invoices, plastic folders and a large coffee (or whatever else you prefer!).
Then lock yourself away for a couple of hours.
2. Get Organized
You now need to organize your ring binder into the following sections:
Invoices - Unpaid -- this section is for your outgoing business expenses that have not yet been paid i.e. supplier invoices. Write on the top of each invoice the date it needs to be paid by and place all unpaid invoices in 'date to be paid' order with the earliest one on top.
Invoices - Paid -- this section is for your outgoing business expenses that have been paid or you've paid at the time service was rendered, i.e. that ream of paper that you bought from the office supplies store. Staple each receipt on to a blank piece of paper rather than just putting them directly into the ring binder. This just makes it easier to see at a glance all your receipts and you can also make notes on the paper. Also write on the top of each invoice/piece of paper the method of payment.
Receipts - Unpaid -- this section is for all your invoices that you have sent to clients that have not yet been paid. Write on the top date payment is due and put them in date order so that it's easier if you have to chase overdue invoices.
Receipts - Paid -- this section is for all your invoices that have been paid. Write on the top the date it was paid and how it was paid i.e. cash, check, credit card etc.
Bank Statements -- this section is self-explanatory! Just keep everything in date order.
3. Schedule It In
Now that you've got your system in place, schedule in each week/month to keep your bookkeeping binder up-to-date. In between updating place all your receipts and invoices in a plastic folder so that everything is together when you come to update your system--it would be too time-consuming to add each receipt as you get it!
What Next?
Depending on how far you want to handle your own accounts, you can either hand your very organized bookkeeping binder over to your accountant at the end of the financial year for them to prepare your final accounts, or you can maintain your own books with the use of financial accounting software.
Either way, you've now got a bookkeeping system that is simple and easy-to- manage and won't cause you to break out into a cold sweat at the very mention of the words 'tax return'.
