You know your business finances need an organization system to them.
I mean, how else are you going to make sure that all of your expenses are included in your bookkeeping so that you get all the expense deductions you are entitled to in your business?
So what is this #1 thing you need in your business to help you with organizing your business finances?
Standard Operating Procedures or SOP
You know, the set of systems you have set up for how you do anything in your business.
You need to also have one for your business finances.
This SOP should outline exactly how and where you store all of your business information, all of your receipts, all of your sales information, all of your tax information, and even all of your bank information.
An SOP can help your business if something were to happen to you. There is a a set of systems in place that mean anyone can find or do things exactly like you would, when you have an SOP in place.
What should be in your Accounting & Bookkeeping SOP?
All of your business’s bank information should be included in your SOP.
Include the bank name, type of account, the online link to login to your account and where the username and password can be found.
Also remember that PayPal and Stripe are considered banking information and should also be included on your SOP banking information.
Note: You can list the username and password to your bank accounts in your SOP, it is your choice. Just remember that if you have team members, they may have access to these SOPs and you may not want them to have access to your bank account info.
The tax information is also part of your accounting and bookkeeping SOP. This information includes your EIN, any business license numbers, sales tax information, and any other tax information your business has.
You’ll also want to include your business contact information in this section. Do you have a physical address where you get all your mail or a PO Box? What is the best way for someone to be reached in your business if there is a financial question?
You’ll also want to include things like tax payment due dates and estimated tax payment due dates. This way, everything is in one place, it’s easy to find and you’ll never have to google when payments are due.
Your Filing System
How do you file your receipts, bank statements, checks, sales invoices, etc?
You should have a system outlined telling exactly how to do your filing.
Remember for IRS purposes, you should be keeping a copy of every single receipt for a minimum of 3 years, but the recommendation is 7 years. If you get audited, you are going to need to produce copies of everything you claimed on your business expenses, so having a very good filing system in place, will make this very easy to do.
Paying Yourself and Paying Your Contractors and Employees
Outline in detail how often you pay yourself in your business. Include your salary information, include the tax information of your salary, include your retirement benefits and any other contributions you make, include your health insurance information.
Outline how often you pay your contractors and employees. For contractors you wouldn’t be paying taxes for, but employees you would be paying taxes, so make to also include that information.
Your Sales System
How does money normally come into your business? What accounts are used for bringing this money in? How do you set up payment links on your website?
Where do you keep track of the clients that are on payment plans? How do you send invoices?
What are all the ways that someone can pay you in your business? Do you have a list of all of the sales pages that someone can buy from that can be accessed easily?
Your Bookkeeping System
What do you use for your business bookkeeping? How often do you do your business bookkeeping?
Make sure to include the login information to your bookkeeping program.
Financial Statement Analysis
How often are you going to analyze your business’s financial statements?
How often are you going to use this information to continue to grow your business?
SOPs are the most important part of your business finances
Then you also have to follow through on using the SOP in your business as well.
You should definitely have an SOP in place for every area of your business. You regularly do a lot of the things in your business on autopilot without really thinking about it.
But if you have someone new in your business, or if something were to happen to you, people are going to need to know how to continue to run your business without you.
Need some extra help creating your Accounting and Bookkeeping SOP? You can get a copy of mine in my Bookkeeping Toolkit. It’s all ready for you to just plug in your information for your business and make it yours.
With your SOP in place, you’ll easily be able to answer a lot of the questions that you have about your business finances and you’ll always be able to look at your financial statements and use them to help you grow your business.