How To Be Awesome At Bookkeeping

Maintaining your books isn't something you should do solely as a tax-savings strategy; it can also prevent you from losing your sanity. Having a separate checkbook shows you recognize the company is its own distinct entity. Furthermore, separate checkbooks should encourage you not to commingle personal and business funds.

Separate banking will improve bookkeeping procedures, prevent payments from being missed, and provide better records to improve your tax return. Having a separate checkbook will improve your chances in an IRS audit. The IRS will often disallow many expenses when personal and business expenses are commingled in a single checkbook.

A credit card that you use solely for business can be a basic accounting system. Most card statements categorize expenses, so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you're less likely to pay cash and lose the receipts, forfeiting tax-time write-offs. 

On your bill, recap the work you did for the client. Don’t add up items. Just include a one paragraph description. “Bookkeeping services rendered for May, which included the following: Bank reconciliation for April statements, cash receipts journal, cash disbursements journal, general journal [if on the accrual basis]. General journal and accruals, trial balance, general ledger postings.” If appropriate, add “payroll preparation,” “quarterly payroll tax returns,” etc. Although most clients don’t understand these terms, they will usually be impressed. And it answers an unasked question, “What does she do for me, anyway?” Put a “thank you” at the bottom of your bill.

For hidden time spent on a client’s behalf, add “multiple phone calls to IRS,” or “with John Smith about. . .” or “with customers about. . . .” But avoid charging for small items, such as photocopying, unless costs exceed $20. Petty charges infuriate clients. Avoid on your bill: “Please call if you have questions.” It sounds as though you think you overbilled. Be consistent in your billing. Don’t give details on one monthly bill, but not the next. Don’t bill on the first one month, the 10th in the next month, the 20th in the month after. Don’t type a bill one month, handwrite it the next. Customers like stability, consistency, familiarity. Since no one likes paying bills, don’t give anyone an excuse to get annoyed. Date bills the last day of the month. It’s much more diplomatic to call in May “about my April bill” than to call in May “about my May bill”—which may sound pushy. 

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