Posted by Assure ● Jul 23, 2020 4:00:32 PM
As a founder, and CEO of a fintech company that serves companies and funds, I have oftentimes found some of the largest and hardest problems to solve could have been avoided with simple steps but are pushed and delayed because other “more important” tasks hijack the time. By encouraging your portfolio companies or your team to follow these 5 suggestions, you can be sure that you will be ready when it comes time to handoff bookkeeping tasks, convert to a c-corp or prepare for tax season.
Top 5 Bookkeeping tips for CEOs (lowest to highest ranking)
Make sure you stay compliant with all local, state and federal agencies if you are not using a third party payroll processor.
Invoice promptly and follow up, do not let your accounts receivable get out of control.
Scan and keep all of your records in your accounting software
Start with the correct balances in the bank accounts and the correct liabilities.
Keep up to date books, do not fall behind.
Make sure you stay compliant with all local, state and federal agencies if you are processing payroll. It is never a good idea to be late or to forget a payment to one of the government agencies. There will be large penalties and interest tacked on to your liability if you do not make timely payments. Government agencies don’t accept the excuse of “I got busy” or “I forgot.” Compliance is the best course of action. Be organized, be careful, calendar the dates, double check your calculations.
Invoice promptly and follow up, do not let your accounts receivable get out of control. Oftentimes, invoicing is one thing that gets put on the back burner, especially if you have enough cash in the bank to float from month to month. The real issues come in at the end of the month, the end of the quarter, the end of the year when you have to catch up and your memory isn’t as fresh. Or if you run into a couple of rough months, a pandemic as we are in now, where cash is short or you decide to raise a round of funding. It always takes longer than you think to raise money, so a couple of little tips, download transactions from the bank account or credit cards on a daily or weekly basis depending on how many transactions you have. Enter all other transactions on a daily basis, invoice weekly and reconcile monthly. Catching up is an awful experience and can result in twice the effort and lower collections. Stay up to date and save yourself time and money.
Keep everything. We had an issue arise with the IRS and we needed to provide a receipt from the Post Office showing that we mailed a document from 4 years earlier in order to get a tax penalty abated. We went through all of our boxes and files of receipts and luckily we found a receipt that satisfied the IRS. Quickbooks software has the ability to attach files to the records so that all of the documentation is in one place. Quickbooks and other software programs do not allow you to download receipts if you change software so keep an extra copy in a well organized file system so you can find it later. Whether you choose to keep everything in a physical location or in a software program, keeping all receipts will prevent disputes if you are ever in an audit. And yes, however unlikely that may be you need to always consider that an audit could potentially happen.
Start with the correct balances in the bank accounts and the correct liabilities. This seems like a simple task but many times this is an oversight that costs you many hours spent trying to find discrepancies. Check those balances at the beginning of each reconciliation. If someone on your team post something incorrectly you will catch that mistake in the balances. Don’t assume everyone knows and understands how to enter payments in arrears or credits to accounts. Teach your bookkeepers, then remember the old adage “trust but verify.” Watching those balances is one way to verify.
Keep up to date books. The number one biggest mistake or problem that companies run into is that they do not keep track of things in the moment. They push off the simple for the more complex but end up spending much more time than needed in the long run. I have seen it in my own company, the biggest fire gets the most attention, but spending an extra 15 to 30 minutes a day to really focus on the transactions download or the invoicing or the accounts payable bring big rewards in the form of more time to build your business because mistakes and neglect always requires twice as much time to fix.