24 July 2012

BOOKKEEPING TIPS FOR SMALL BUSINESSES

There is an old saying, "If it can’t be measured, it can’t be managed." Every business, whether big or small, must have a bookkeeping system in place as it is the only way know whether it is making a profit or loss. No matter how much your small business thrives, it can all go downhill without proper bookkeeping. Many small business owners find bookkeeping a daunting task that takes them away from running their business. They often leave this task to the weekends or evenings. Some pile every piece of paperwork into a box and come tax time, they dump these boxes with a bookkeeper. If you don't have time to do your bookkeeping every week at the least, rather employ a freelance bookkeeper and stay up to date with your money matters. By adopting a few basic procedures, you can save time, money and stress.

1. BANK ACCOUNT STATEMENTS
Request a statement with a month-end cut-off date. This makes it easier to record income and expenses, as well as saving time when reconciling. Don't file your bank statements away without reviewing them.

2. STORAGE BOXES FOR EACH NEW YEAR
Keep all your records for one year in one box. Label it with the year and contents on the outside of the box.

What to keep - and for how long (in South Africa):

Indefinitely:
Annual financial statements
Companies Act returns
Dividend schedules
Documentation on members' interests
Fixed asset registers
Insurance agreements
Memoranda and articles of association
Mining authorisations
Minute books
Participation and joint venture agreements
Payments made on behalf of personnel
Personnel benefits
Property ownership titles
Prospecting agreements
Register of company directors / officers
Register of directors' interests
Register of members
Special resolutions
Stop orders
Tax returns / assessments
Trust deeds

7 Years:
Appointment agreements (auditors, professional advisors, etc...)
Bank statements
Cashbooks
Cession / assignment agreements
Cheques and cheque requisitions
Confidentiality agreements
Creditors' invoices / statements
Deposit slips
Financial services / banking agreements
Fixed assets register
General financial files
Guarantees / surety
Journal reports
Leases
Loan agreements
Permits and authorisations
Petty cash vouchers
Sales invoices
Supply agreements
Vouchers

5 Years:
Employment contracts
General ledger reports
General personnel files (for 5 years after employment ceased)
Personnel loan records

4 Years:
Payrolls / salary and wage registers

3 Years:
Attendance registers
Creditors' ledger
Debtors' ledger
General records and correspondence
Increment schedules (personnel)
Leave forms
Offers of employment
Other internal financial documentation
Petty cash book
Vouchers journal

1 Year:
Cheque stubs (after annual audit)

3. FILING INVOICES
Start new file folders at the beginning of each year for all your invoices. It's not necessary to start a folder for each customer or vendor unless you do a large amount of business with them. Sales invoices must be in numerical order. Do not skip numbers and also file the invoices in this order. File all expenses paid by the business in a separate file. File paid invoices separate from unpaid invoices. Make copies of till slips, as the ink fades easily and makes the invoice unreadable, attach the original to the copy.

4. FROM PAPER SYSTEM TO COMPUTER PROGRAMME
If you're moving from a paper bookkeeping system to a computer programme, you will want to run both systems for a few months, until you are sure both systems come up with the same totals before dropping the paper system.

5. DEPOSIT CASH RIGHT AWAY
If you receive cash payments, deposit it the same day. This ensures that all income will be properly recorded.

6. MAINTAIN DAILY RECORDS
If you don't have time to do a little bookkeeping each day, when will you find time to record a month's or a year's worth of records? Have a system and use it daily to stay on track.

7. SEPARATE BANK ACCOUNTS
Separate personal accounts from business accounts, don?t mix the two - this includes credit cards.

8. PETTY CASH BOX
Keep a proper petty cash system whereby a set amount is in petty cash and each time money is taken out a petty cash slip is completed.

9. MONTH-END
By the middle of a month, at the very latest, you should have reports that show you what happened in the previous month. Your bookkeeper would be doing you a great service by having these reports ready within three business days of the end of each month.