Your bookkeeping system is the financial heart and lifeblood of your business. When set up and operating properly, your books help you make smart decisions and seamlessly turn your financial data into useful information. Here are four key characteristics to building and maintaining a healthy bookkeeping system:
Select the proper accounting method. There are two different methods for recording transactions: cash-basis and accrual-basis. In general, the cash-basis method records a transaction when a payment is made, while the accrual-basis method books the transaction upon delivery of the good or service. Cash-basis is easier to track and a useful option for smaller businesses and sole-proprietors. Larger businesses who buy from vendors on account (accounts payable) generally use accrual-basis accounting.
Selecting the proper method affects any related financial transactions and how your financial statements are displayed. A correct approach will also include consideration of outside factors, including IRS rules (businesses with more than $25 million in gross receipts must use accrual-basis), bank covenants, and industry standards. Once a choice is made, it can be changed but it must be properly reported to the IRS.
Create an account structure that fits the company. Every business has a chart of accounts included in their bookkeeping system. These accounts sort the business’s transaction data into six meaningful groups. They are assets, liabilities, equity, income, cost of goods sold and other expenses. Each group will often have numerous accounts and sub-accounts associated with them.
Having the right mix of accounts, created and grouped in an organized fashion, will help you properly classify transactions and prepare usable financial statements. The proper account structure for your company will mesh with your specific information needs.
Enter accurate and timely transactions. The value your data provides is dependent on each transaction being recorded correctly and on time. Entering transactions in the wrong account can cause major issues down the road. Financial reporting that is delayed can hide problems that need immediate attention. Some transactions are relatively straightforward, and some are more complex (like payroll, accruals and deferrals).
It’s important to have someone who understands both your business and the accounting rules to enter your transactions in a timely fashion. In addition, a good month-end close process that involves reviewing each account will help you identify and fix mistakes from the initial entries.
Establish financial statements for decision-making. The main financial statements are the income statement (income – expenses = gross profit), the balance sheet (assets – liabilities = equity) and statement of cash flow. Each statement has a specific purpose:
Income statement. The income statement shows company performance for a select period of time, typically monthly with a full-year summary. At the end of each year the income statement restarts.
Balance sheet. The balance sheet displays a company’s overall health on a specific date. It is perpetual. This means it doesn’t end until the business is closed or sold. It includes one line that summarizes the current year and prior year results from the income statement.
Statement of cash flow. This statement summarizes the inflows and outflows of cash. It ensures you know whether you have enough cash and the pattern of your cash position over time.
If properly executed, your bookkeeping system will create accurate financial statements that can be used to make key financial decisions. Feel free to call with any questions or to discuss bookkeeping solutions for your business.
Ever catch yourself mid-call with the doctor or your internet provider, only to hang up and find your notepad full of squiggles, stars, and mystery objects? No, you weren’t just zoning out…you were doodling!
You may have dismissed these spontaneous little sketches your hand makes while your brain is deep in thought, but your doodles often have a surprising secret life. Here are three unexpected perks of letting your writing tool of choice wander around.
Boosting your memory. Doodling isn’t just a mindless habit – it’s a memory booster in disguise. Think back to your days as a student, frantically jotting down notes during class. Sure, those scribbles helped you study late into the night, but part of the magic was in the act itself – writing things down can help wire them into your brain. Doodling works the same way. It transforms what you’re hearing into visual cues, helping your mind remember the important stuff. It’s like your pen is quietly highlighting things your brain wants to remember.
Sharpening your focus. Doodling might be your secret weapon for staying on task. In a Harvard Medical School study led by psychologist Jackie Andrade, 40 people listened to a dull 2.5-minute voicemail (riveting stuff!), and guess what? The ones who doodled remembered nearly 30% more than those who didn’t. Why? One theory: doodling keeps just enough of your brain busy to stop it from drifting off into daydream land, so the rest of your mind can stay tuned in. It’s like mental noise-canceling – with a pen.
Relieving your stress. Doodling is like a mental exhale. Unlike drawing something specific, there’s no plan, no pressure with doodling — just your pen or pencil doing its thing. That’s the beauty of it. When your brain’s juggling a dozen to-dos and overthinking every little detail, doodling gives it a moment to wander. No rules, no goals, just shapes and squiggles that let your mind breathe. It’s a quiet reset. And in the middle of a hectic day, that tiny act of letting go can feel like a full-blown stress detox.
With so many things grasping for our attention, it can be difficult to focus and retain information in the middle of a busy day. If you find yourself drifting during a meeting, or your kids struggle to pay attention to subjects they find less interesting, give doodling a try to see if it works for you!
If juggling priorities were an Olympic sport, young parents would win the gold medal. Raising kids, advancing careers, paying off student loans, and saving for a home is a lot. All this makes estate planning feel like a tomorrow problem.
But estate planning puts you in charge of your family’s financial future if the unexpected happens.
Here are three ways you can protect your family’s future by starting your estate planning today.
Protect your current income
Your current income is the fuel that keeps your household going. Here are several ideas to protect your earnings:
Minimize tax liabilities using tools such as trusts or family limited partnerships can shield assets from estate or capital gains taxes.
Protect against lawsuits and creditors by structuring ownership through legal entities or trusts. These separate legal entities can make it harder for lawsuits or creditors to reach your personal income or business revenue.
Ensure income continuity if incapacitated. With powers of attorney and living trusts in place, you can tap someone you trust to manage your income and financial affairs if you’re unable to do so.
Protect your future income
Estate planning isn’t just about distributing assets—it’s a proactive way to secure financial stability down the road. Here are several ideas to protect your future income.
Preserve wealth using tax planning strategies. Trusts, retirement accounts, and gift giving can minimize your future estate and income taxes, helping you retain more of your earnings over time.
Safeguard business and investment income. Planning for succession or setting up buy-sell agreements ensures that income from businesses or investments can continue in the future, even after death or incapacity.
Provide long-term control over assets. Set specific terms in wills or trusts to dictate how and when income-generating assets are used. This can protect them from mismanagement or being wasted in short order.
Protect your children
Estate planning isn’t just about money – it’s also about protecting your kids if something happens to you. Here are several ways to protect your children.
Ensure guardianship. If you pass away or become incapacitated, a will lets you name who should raise your children. Without this, the decision goes to the courts, and a judge will choose a guardian. Naming someone in your estate plan ensures your children are raised by someone you trust, in a stable and familiar environment.
Control their inheritance. A well-structured estate plan allows you to manage how and when your children receive their inheritance. For example, you can create a trust and decide when to distribute money and for what purposes, such as education, health care, or buying a home.
Minimize conflict. When your wishes are clearly written in legal documents, it leaves less room for disagreements among family members. This can help prevent costly legal battles or emotional fights over who should care for the kids or how money should be used.
Many people believe estate planning is only for the very wealthy. But as you can see, managing an estate is important for everyone, regardless of income level. Consider reviewing your situation with a qualified expert and help create peace of mind for yourself and your loved ones.
