Bookkeeping for your business is a task that you really don't enjoy because it just doesn't come easy for you. But you know that it needs to be done so that your business can stay successful, because bookkeeping means taking care of your money in your business.
Plus a lot of stress usually comes with taking care of your business finances.
When your business finances are organized and taken care of on a regular basis, you can easily eliminate a lot of that stress.
But how do you know which bookkeeping tasks should be done when?
Here is a guide to help you know when you should be doing your bookkeeping tasks in your business.
Daily Bookkeeping Tasks
Check Your Bank Account
You may wonder why I say to check this daily. When you check it daily, you can always be sure that it is only you that is using your bank account.
With all of the fraud and security breaches out there, while it is best if you can avoid having your information stolen, that is not always the answer because you have to use your money.
But when you look at your bank account on a daily basis, you can be sure that it is only you that is accessing your money in your account. And when you see activity that wasn't you, it's easy to report it.
Plus you'll know what your bank balance looks like on a regular basis. Is it low? Do you have enough to pay your monthly bills? When do client payments come in?
You'll know your trends in your business. These trends will also help you with planning for your cash flow plan, your business budget and your business goals.
Track Your Money & Categorize Your Expenses in Your Bookkeeping Software
Once a day, pick a time to be consistent, open up your bookkeeping software or spreadsheet and track your money in your business.
Put all of your transactions into the correct categories. Need help with categorizing your expenses? You can also read Bookkeeping for Your Online Business for more information on what bookkeeping is and what you need to do.
When you categorize your transactions and review them on a regular basis (preferably daily, but weekly is okay too), everything is still fresh in your mind and it's easy to remember what you spent your money on.
If you are to do your bookkeeping months later down the road, you usually aren't going to remember what you spent your money on.
I see this happen regularly.
When you are questioned by an accountant, bookkeeper, or even yourself, you can't explain what a certain transaction is for because your bank statement says some obscure name that you have no idea what it even means at this point.
But when you look at and categorize your stuff on a daily basis, it becomes much easier and you know what you spent your money and what each item is in your bookkeeping software.
Plus this way, you can put it in the correct category and even add any notes if you need to.
When you do this process on a daily basis and understand what you are doing, it will normally only take you 5-10 minutes a day.
Also check out: How to Audit Your Business Expenses
Finally take your taxes from frustration, chaos and confusion to calm and organized.
Learn everything you need to know to master your business finances and taxes explained in plain English.
Weekly Bookkeeping Tasks
Pay any Bills Due
Since you are running an online business, I'm going to bet that just about all of your expenses show up in your inbox and probably about half (or maybe even more) are automatic payments.
If they are automatic payments, then you don't need to actually pay them, but you should know when the payment is going to come out of your bank account, so that you know there is enough money in the account.
I like to keep an excel spreadsheet that details out all of my automatic payments. While most vendors do send you an email when your annual subscription is going to auto-renew, some don't. Then you have a payment showing up on your bank statement and you have no idea what that payment is for.
But you also most likely won't have a stack of bills sitting on your desk in a folder to be paid.
Or maybe you are the kind of person that does print them out and keeps a file folder. But I'm going to bet that you don't do that.
For any other bills that are not on automatic payments, make sure you pay them on a regular basis. You don't need to accumulate late fees, or even accidentally pay a bill twice.
Send Client Invoices
I can't tell you how many people I run across who don't like to send their invoices!
You did the work for your client, so you deserve to get paid!
I've even been on the other end, where I want to pay the person who did the work for me and they won't send me an invoice.
Set aside a time on a weekly basis to sit down and create your invoices and send them.
You don't have a business if you don't get paid and bring in money. So send those invoices!
Also check out: How to Get Your Client to Pay on Time Every Time
Mark Any Paid Invoices as Paid
If any of your clients have paid in the past week, make sure you go into your bookkeeping system and mark those invoices as paid.
For some bookkeeping programs, if one invoice is unpaid, and another invoice is sent, the unpaid invoice will also show as being due on the new invoice.
If the client has already paid their invoice, you don't want to send them an unpaid balance for past invoices, do you?
Follow Up on any Unpaid Invoices
This is another thing I see clients not doing. You need to follow up on unpaid invoices to get the money from your client.
Again, you won't have a successful business if you don't get paid.
You've already done the work for your client, so you deserve to get paid.
Follow up and ask your client to pay their invoice at their earliest convenience.
You can also read How to Get Your Client to Pay On Time Every Time, if you need more assistance with getting clients to pay you on time.
Organize Your Receipts
Whether you are getting audited it or not, you need to keep a copy of all of your receipts.
You can keep your receipts in electronic form. It doesn't matter if you keep them in your inbox, or another folder on your computer somewhere.
But they should be organized in a manner that makes it easy for you find something when you need it.
Create a filing system that you know how to work with.
In Quickbooks, you can also upload a copy of the receipt to your expense item.
Just make sure you keep a copy of every receipt, and you create a system of organization that makes it easy for you.
Also check out: Organize Your Business Finances
Transfer Money to Your Savings
Once a week, you should transfer any excess money from your bank account to your savings account and to your tax savings account.
The money you are transferring to your savings account is your profit.
The money you are transferring to your tax savings account is for your estimated tax payments, payroll taxes and any sales tax that you collect.
By having the money in your tax savings account, you know exactly where the money is going to come from when it comes time to make your quarterly payments.
Plus when you transfer this money to a savings account, you have the ability to earn interest on this money as well. Let your money work for you!
Pay Yourself and Any Other Employees You Have
Obviously you want to get paid too. Most online businesses do not have employees, they have independent contractors. But if you have employees, make sure you run your payroll and pay your employees as well.
Make sure you pay yourself to your personal bank account and do not use your business bank account for your personal expenses!
You should set up a regularly recurring payment to yourself to make sure you get paid on a regular basis. The interval that you pay yourself doesn't matter - weekly, biweekly, monthly. Just keep it consistent, along with the amount of money you pay yourself.
Also check out: Paying Yourself in Your Online Business
Monthly Bookkeeping Tasks
Reconcile Your Bank Balances
At the end of every month, you should go through your bookkeeping software and reconcile your bank account. The numbers just need to match at the end of the month.
If everything is in your bookkeeping software, then it's a quick and easy process to reconcile your bank balances.
Most contractors get paid on a monthly basis - think virtual assistant, bookkeeper, social media manager - they are your contractors.
Just like you like to get paid from your clients, your contractors like to get paid from you as well.
Set a regular payment schedule and stick to it.
Review Your Income Statement, Balance Sheet and Any Other Reports You Need to Look At
I like to couple this process with the bank reconciliations. Once the reconciliations are complete, then run the income statement and balance sheet.
Read through these statements and make sure everything looks good. Need help reading your statements? Check out How to Read an Income Statement.
These are statements that every business owner should be looking at on a regular basis. You should know how to read these statements.
When I am your bookkeeper, I will send you a PDF copy of your income statement for your review. Some of my former clients admitted me to that they never once looked at a single income statement that I sent to them.
You need to know what is going on in your business on a regular basis and the best snapshot of that is your income statement.
Review Your Business Budget and Compare to Actual
Your income statement and balance sheet will also help you review your business budget and the income statement makes it super easy to plug your actual numbers into your budget spreadsheet so that you can compare.
You want to know how well your business is doing and if you need to make any changes in the current month.
Check Your Inventory & Assess
If you are a business that sells physical goods, you want to do an inventory assessment.
You also want to update your inventory count to make sure that everything you have in stock is accounted for. Your inventory is important to your business and the success of your business, so knowing the status of your inventory is an important task of your business.
Quarterly Bookkeeping Tasks
Pay Your Estimated Income Tax Payments
Paying your estimated tax payments will reduce the amount of money you owe when you file your tax return at the end of the year. Plus when you pay estimated taxes, you are eliminating the penalty that would be owed to the IRS if you didn't pay at all. (YES, they charge a penalty for not paying your estimated taxes!)
The amount you pay for your estimated tax payments will vary. Some people will send their quarterly income statement and balance sheets to their accountants for them to tell them how much to pay. Some people pay 20-30% of their net income from the past quarter. And others pay 110% of what they owed the previous year.
The method that you use to pay your estimated taxes doesn't matter, as long as you pay them.
You are also setting money aside on a weekly basis, so you already have your money saved up to easily make this payment.
The payments are due on the 15th of the month after the quarter ends.
- First Quarter (January - March) - Due April 15
- Second Quarter (April - June ) - Due July 15
- Third Quarter (July - September) - Due October 15
- Fourth Quarter (October - December) - Due January 15
Also check out: How to Prevent a Huge Tax Bill When You are Self-Employed
Pay Your Payroll Taxes
If you have payroll in your business, make sure you remit your quarterly payroll taxes. The same due dates for quarterly payroll apply as listed above for your estimated quarterly taxes.
Pay Any Sales Tax Collected
This may vary by state and by how much you collect. Sales tax returns are usually filed quarterly and payments are due when you file the return.
Don't know if you should be collecting sales tax or not? Check out this guide to sales tax for your online business.
Just like your quarterly estimated payments, you have been setting aside the money that you collected for sales tax, so this payment is quick easy to make.
Make sure you also check with your state to make sure that you are filing this return by the correct due date. In Pennsylvania, the returns are due by the 20th of the month after the quarter or month ends.
Also check out: The Ultimate Guide to Sales Tax for Online Business
Review Your Prior Quarter's Goals and Compare to Actual
Quarterly goals are the best goals to set because they are long enough to make a difference, but also short enough to easily evaluate what kinds of changes you need to make.
Review the goals that you set for the quarter that just finished.
Did you accomplish your goals? Were your goals too ambitious? Did your goals challenge you?
Did you completely forget about the goals that you set?
You want to know what your progress is like on your goals and how well you have achieved your goals. This will also make way for setting your goals in the next quarter.
Set Next Quarter Goals
Since you've just finished reviewing last quarter's goals, you can easily set this quarter's goals.
What do you really want to achieve this quarter in your business?
Make sure you set your goals so that they stretch you, but also ones that are reachable as well. You want to be able to achieve your goals, but you also want to push yourself as well.
Once you set your goals, break them down into bite-size pieces to make them easier to achieve week by week through this coming quarter.
Review Your Cash Flow Plan
Your cash flow plan should flow right along with your quarterly goals. It helps you realize where you are going to make your money in your business throughout the year.
When you review your goals, you should also review your cash flow plan to make sure you are on target. Plus you can easily make any changes that need to made as well.
Also check out: How to Create a Cash Flow Plan for Your Business
Give Yourself a Portion of Your Profit as a Bonus
You have been transferring your profit to a savings account on a weekly basis. Now you can give yourself a bonus from this profit.
Don't pay yourself the whole profit! Leave some money in your account.
But use this bonus for something for yourself that you've been really wanting. (This is not a re-investment in your business!)
Also make a celebration that you can get to give yourself a bonus!
Yearly Bookkeeping Tasks
Give the Reports that Your Accountant Needs to Your Accountant
When your bookkeeping is already done, it's really easy to run the reports that your accountant needs to file your tax returns.
Contact your accountant and ask what reports he/she needs. Then run those reports and send them over.
Your accountant may or may not have further questions, but this makes filing your tax returns quick and easy when your bookkeeping is already done and organized.
Also check out: Do I need an Accountant or a Bookkeeper for my Business?
Compare Your Annual Reports to Your Business Goals
Last year, you set a goal for your income this year. Did you meet your goal? Did you fall short of your goal? Did you exceed your goal?
Use your annual reports to compare your progress over the past year to your goals.
Set Goals for the New Year
Now you can easily set your goal for this coming year as well.
With your goals, you want to stretch yourself a little bit, but also make sure it's achievable. Plan out your goals based on your progress over the past year.
Create a New Cash Flow Plan
You should have been reviewing your cash flow plan on a quarterly basis and reevaluating it as needed.
Now it's a new year and time to set a new cash flow plan.
What are you planning for your business for this upcoming year? How does this plan tie into your goals that you just set for the new year?
Create a New Budget for the Year
Look at last year's budget and reevaluate it for you any changes you may need to make. Then create a budget for the new year.
Send 1099's to Contractors and W-2's to Employees
When you pay someone more than $600 in a year, you are required to send them a 1099. Here are more guidelines for 1099's in your online business.
You also need to send any employees a W-2, and it doesn't matter how much they earned. If they were on your payroll, you need to send them a W-2.
Review and Reassess Your Salary, Tax Savings, Expenses and Profit
How well did your business do over the past year? Did you make a nice, healthy profit in your business? Did you spend way too much money?
Did you pay enough in estimated taxes or did you underpay?
What about paying yourself? Did you pay yourself a healthy salary? Or did you barely pay yourself at all? Can you give yourself a raise this year?
Evaluate how much you are paying your contractors as well. How have they helped you grow your business this year? Do they deserve a raise?
Assessing these goals and how much money you made and paid out, is a really good way to sort out your financial health in your business, as well as help you plan for a way to move forward.
It also helps you realize where you need more help or even less help in your business.
These daily, weekly, monthly, quarterly and annual bookkeeping tasks will help you build up your financial health in your business. You will know where your money is coming from and where it's going.
It's true that bookkeeping tasks aren't always fun, but they are necessary if you really want your business to succeed. While you can hire a bookkeeper to take the categorizing of your expenses and preparing your income statement and balance sheets for you, evaluating your goals, budget and cash flow plan, and reviewing your income statement and balance sheet is something that you as a business owner and CFO need to do on your own.