Daily Recording of Transactions

In order to take control of your financial recordkeeping, you must accurately record your day-to-day sales, purchases, and other transactions. Specifically, you need to record:

• sales and revenue transactions
• cash transactions
• accounts receivable, if you extend credit to your customers
• accounts payable, if you purchase from your suppliers on credit
• summaries of transactions in your general ledger

Do you have more than one product line or department? If possible, you may want to keep a separate set of books for each. Separate accounting will provide you with more meaningful information. It may show you that one product line or department is profitable, and another is not. Unfortunately, it may be difficult to keep a separate set of books for each product line or department. For example, some or all expenses may not apply to only one department, but must be allocated among departments. You should seek the advice of an accountant before setting up an accounting system of this nature.

There are many software solutions on the market to help you automate your accounting procedures. Shop around. Accounting software is sold in office supply stores, software outlets, electronics stores, mail order houses, and directly from software publishers. Ask for your accountant's opinion. Your accountant may want you to use software that is compatible with the system he or she uses.

If you have employees, look for accounting software that permits the use of passwords to control access to all or some of your accounting transactions. In order to prevent irregularities by your employees or others, it's wise to restrict access to your accounting records.

Whether your business is a sole proprietorship, partnership, or corporation, always keep your personal transactions separate from your business transactions. For example, using business funds to pay for personal expenditures complicates your recordkeeping and can lead to serious tax problems. It can also result in some hefty accounting fees as you pay your accountant to sort it all out.