The Blog Of TL Wall Accounting

Archive for November, 2012

The Art Of Bookkeeping

Handling the bookkeeping for many small to medium sized businesses is something that T. L. Wall Accounting does, and we believe we do it well. Bookkeeping really isn’t difficult if you have the time to keep up with it, and yet we find that there’s also an elegant art in doing it that can help our customers. If you’re predisposed to do your own bookkeeping, here are a few ideas that might help things go smoothly.

1. Categories. There are two things we find that people do which can throw them off immeasurably. The first is not having any breakdowns in their income and expenses so they know more about their money. The second is having so many categories that it feels like a miasma when trying to figure out where something should go, which often means another category ends up being created because it seems like the easiest way to go.

For most people, you should only consider breaking things into your top four areas of concern, and throwing everything else into miscellaneous. If you are a photographer for instance, probably your top four expenses are equipment, marketing, photo processing and binders/frames, if you’re a portrait photographer. If you have a full time assistant you might need to have a category for that. If you have a website but only pay for hosting and your yearly domain payment (which you might only pay once for upwards of 3-5 years in advance), you could list that under miscellaneous because it’s a minimal cost and not something that overtly stands out. As long as you have the ability to write a brief note next to it you can get by without having to create another category. Travel is something that also goes under miscellaneous since you can only list mileage and not the actual cost of gas or maintenance.

2. Receipts. We get receipts from everywhere but when we need them for accounting purposes, we need them to prove what we’re claiming. There needs to be a repository somewhere in your office or home where you throw all receipts in, no matter what they are, until you have time to look at them. To steal from Judge Judy, if it’s not on paper it doesn’t exist.

You also need to make sure you mark certain receipts that might not look like they’re business related on the surface. For instance, if you met someone for lunch or dinner and the discussion was business related, you can write that off and thus you need to label that receipt for both your accountant and yourself, as you might not remember two months later that you’d had that event.

3. Invoices. Invoices may or may not be different than invoices. If the work you do means that you give someone a small invoice after you do work for them, you’ll need to make sure you hold onto that invoice book. If you take checks you’re covered, but if you’re being paid cash you might need the extra proof. Invoices also help you prove when money you’re given is payment or is for expenses, on which you don’t have to pay taxes.

4. Dates. Going back to writing notes, you need to make sure everything has a visible date on it, or else you need to write it on there. Dates are proof that something happened in a particular month and year, and you might forget when things actually happened.