Start-up Accounting Checklist. Keeping everything on the check is much easier. Besides helping you close out the current on a high note, it also starts your business off in the next year on the right foot. As December can be a busy time, it pays to start your preparations early. This checklist helps you stay compliant and avoid last-minute stress.
Managing your business finances does not have to be eat-your-spinach drudgery. The key, of course, is to create a realistic plan with a budget, record your transactions correctly, review your results regularly, and always keep good records. Your comfort level with the three basic financial reports that evaluate your fiscal health is also essential such as the balance sheet, income statement , and cash flow statement.
The following checklist lays out the key accounting functions that will keep you attuned to the state of your business and streamline your tax preparation.
- Check Cash Position
Since cash is the fuel for your business, you never want to be running near empty. Start your day by checking how much cash you have on hand. Knowing how much you expect to receive and how much you expect to pay during the upcoming week/month is important, too—but it is not gas in your tank.
- Record Transactions
Record each transaction in the proper account daily or weekly, depending on volume for instead, billing customers, receiving cash from customers, paying vendors, and etc. Although recording transactions manually or in Excel sheets is acceptable, it is probably easier to use accounting software like QuickBooks. The benefits and control far outweigh the cost.
- Document and File Receipts
Keep copies of all invoices sent and also all cash receipts example cash, check and credit card deposits, and all cash payments like cash, check credit card statements, and etc.
Start a vendors file, sorted alphabetically, Staples under “S”, Costco under “C,” etc for easy access. Create a payroll file sorted by payroll date and a bank statement file sorted by month. A common habit is to toss all paper receipts into a box and try to decipher them at tax time, but unless you have a small volume of transactions, it’s better to have separate files for assorted receipts kept organized as they come in.
- Review Unpaid BillsfromVendors
Every business should have an unpaid vendor folder labeling. Keep a record of each of your vendors that includes billing dates, amounts due, and payment due date. If vendors offer discounts for early payment, you may want to take advantage of that if you have the cash available.
- Prepare and Send Invoices
Be sure to include payment terms. Most invoices are due within 30 days, noted as Net 30 at the bottom of your invoice. Without a due date, you will have more trouble forecasting revenue for the month. To make sure you get paid on time, always use an invoice template the contains the right details such as payment terms, itemized charges, and your payment address.
- Review Projected Cash Flow
Managing your cash flow is critical, especially in the first year of your business. Forecasting how much cash you will need in the coming weeks or months will help you reserve enough money to pay bills, including your employees and suppliers. Plus, you can make more informed business decisions about how to spend it. All you need is a simple statement showing your current cash position, expected cash receipts during the next week or month, and expected cash payments during the next week or month.
- Balance Your BusinessCheckbook
Just as you reconcile your personal checking account, you need to know that your cash business transaction entries are accurate each month and that you are working with the correct cash position. Reconciling your cash makes it easier to discover and correct any errors or omissions either by you or by the bank in time to correct them.
- Review Past-Due Receivables
Be sure to include an aging column to separate open invoices with the number of days a bill is a past due. This gives you a quick view of outstanding customer payments. The beginning of the month is a good time to send out overdue reminder statements to customers, clients, and anyone else who owes you money. At the end of your fiscal year, you will be looking at this account again to determine what receivables you will need to send to collections or write off for a deduction.
- Review Actual Profit and Loss vs. Budget and vs. Prior Years
Your profit and loss statement is also known as an income statement, both for the current month and year to date tells you how much you earned and how much you spent. Measure it against your budget every month or quarter. Comparing your actual numbers to your planned numbers highlights where you may be spending too much or not enough, so that you can make changes. If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period year-to-date P&L to identify variances and make adjustments.
- Review Month-End Balance Sheet vs. Prior Period
By comparing your balance sheet at one date June 30, 2015, for example to a balance sheet from an earlier date December 31, 2014, you get a picture of how you are managing assets and liabilities. The key is to look for what is sign up and or down and understand why. For example, if your accounts receivable is up, is it due to increased recent sales or because of slower payments from customers?
Now that you have done your checklist, reflect on whether your company has managed to achieve the goals it set for the year. Make plans for the coming year by refining your vision and mapping out new milestones. If your company does not handle its accounting in house, consider engaging a professional corporate services provider like us to ensure your business stays fully compliant. This frees up your time and also gives you a better focus on your operations and profits.