You Asked, We Answer: The Top 5 FAQs for Bookkeepers

We’re sharing our answers to the questions we get asked the most!

FAQ #1: What kind of records do I need to keep for my business? 

As a business owner, it’s essential to maintain accurate records of all business income, including sales and services, as well as expenses such as supplies, rent, and utilities. 

This includes invoices, receipts, bank statements, and any other documentation that supports your financial transactions. The better organized your records are, the easier it will be to track your financial health and prepare for taxes.

FAQ #2: How often should my bookkeeping be updated? 

We recommend updating your bookkeeping on a weekly basis, or at least every other week. 

Keeping your books up to date helps you stay on top of cash flow, identify any issues early, and makes monthly and year-end reporting much smoother.  Waiting too long can lead to a backlog of work and increase the chances of errors.

FAQ #3: What’s the best way to organize my receipts? 

There are several effective ways to organize receipts. You can use physical files labeled by category and date, or you can utilize digital methods, such as scanning receipts and storing them in cloud-based software or dedicated apps. 

Consistency is key – choose a method that works for you and stick with it to avoid scrambling and searching before tax time.

FAQ #4: What are some common tax-deductible business expenses? 

Provided you have thorough records, business owners can often claim deductions for expenses such as: office supplies, rent for business premises, utilities, business insurance, professional development, travel expenses directly related to your business, and certain marketing and advertising costs. 

It’s essential to understand the specific rules and limitations established by the IRS. We recommend consulting with a tax professional to ensure you're claiming all eligible deductions correctly. 

FAQ #5: What financial reports should I be reviewing? 

Two of the most common and helpful reports that business owners should regularly review are a Profit and Loss (P&L) statement and a Balance Sheet.

The P&L is also known as an income statement. This report shows revenues, expenses, and ultimately, your profit or loss over a specific period. A Balance Sheet provides a snapshot of your company's assets, liabilities, and equity at a specific point in time.