A stitch in time saves nine.
For those unfamiliar with this expression, it comes from an era when people used a needle and thread to mend their own clothes. The idea was that a little preventive maintenance now can eliminate the need for major repairs later (only one stitch as opposed to ten).
I was a little girl when I heard this expression, but it has always stuck with me.
When I started working as a bookkeeper, and especially when I started my own bookkeeping company, this expression resonated even more.
Because in business accounting, there are many areas where procrastination can lead to bad results.
Here are my favorite top three accounting tasks you should never put off as a business owner:
#1 Importing bank and credit card transactions
Most major banks and credit card companies allow account holders to import their statements (with the entire list of transactions) directly into their accounting software. This is a huge time saver, because you no longer have to enter each transaction by hand.
The reason you don’t want to put this task off is because banks and credit card companies only make their online statements available in an exportable format for a limited time. For most banks, this time period is between six months and one year. Check with your bank or credit card company to find out their policy, because you don’t want to wait until the end of the year only to discover that your financial statements are no longer available for exporting.
UPDATE – Since I originally wrote this post, most small businesses have made the switch to cloud accounting (like QuickBooks Online) for keeping their records. If the system is setup properly (and assuming you’re not working with an archaic bank), your transactions should be importing into your software in real time.
HOWEVER, while importing the transactions is no longer an issue for those using cloud accounting software, it still often happens that a business owner hasn’t downloaded monthly bank statements – and when they go in a year later to retrieve them, they’re no longer available.
So my advice? Schedule a bi-monthly 10 minute appointment in your calendar to regularly log into your bank account and download the bank statements.
#2 Notating non-income deposits
Most businesses have some money deposited into their banking accounts that is not income.
For instance, maybe you deposit some of your personal savings into the business checking account so that a business check doesn’t bounce.
Or maybe your business receives a loan from a business associate.
Whenever you receive money that is not income, it is really important to notate it promptly (and correctly) in your books.
The reason for doing this (just like importing transactions) is that banks often limit the time period when you can retrieve detailed deposit information online. Typically, this period ranges from 6 months to a year, but with some smaller banks, you can’t get any information about your deposits without going to the bank in person.
The bottom line is, you need to record your non-income deposits (it could be as simple using a notebook or tracking app). If you don’t, you might find yourself trying to remember (or guess) where deposits came from a year after the fact… and worst case scenario, paying taxes on money that you loaned yourself.
#3 Backing up your accounting file
With the amount of time and effort that you (or your bookkeeper) put into your accounting file, you want to make sure that it is backed up somehow.
Online accounting applications take care of this for you by automatically backing up your file in the cloud (although it never hurts to do your own backups—just to be sure).
If you use a desktop accounting application, you will need to take extra steps to back up your file. Most desktop accounting applications, such as QuickBooks® Software, allow users to set up automatic backups, and choose where these backups are stored.
So Over to You:
Do you ever put off accounting and bookkeeping tasks? What’s been your experience? Share in the comments below!