Bookkeeping and your 2011 tax return

Here are the transactions you need to be aware of in order to file your 2011 small business tax return:

Cash transactions - these are items purchased will cash. Cash receipts are the only proof you have of the expense your business incurred. Separate them out and put them in similar categories, such as parking, fuel, and office supplies. Total each category.

Credit Card Transaction – collect all of your statements for the year. You will need to categorize each transaction by expense, same idea as the cash receipts. Total each category.

Bank Account Transactions - Collect bank statements the way you did the credit card records. Review the bank statements then categorize checks and debit transactions and get a total for the categories. Also, go through and categorize deposits that are income vs loans.

Business transactions paid by personal accounts. Sometimes, we forget the business credit/debit card and use our personal cards. Go through your personal credit card and bank statements and categorize the business transactions, and then total those up by category.

At this point an excel spreadsheet can be helpful. You can get a list of the categories you've created and enter the figures to come up with the grand totals.

Accountant Jackie David, who provides bookkeeping and accounting help around La Canada, California and Glendale, California will send a free the template she uses for anyone who signs up for her blog or contacts her through email. Log on to Jackie's accounting blog Technoccountant's Perspective.

Organize your finances one bite at a time

Here’s a cash flow tip on organizing small business finances from Jackie David, an accountant and principal of Your Back Office, located in La Canada, California.

Jackie works with web designers, advertising agencies and a variety of clients. She tells them to treat their finances like being on a diet.

“If you need to lose weight, you’re not going to do it all at one time. You’re going to take little steps each day and it’s the same with organizing finances.

She writes about taking the small steps on her blog, Technocountant Perspective.

One key tip. Jackie says if you’re behind on entering income and expenses, then start with the current date. Jackie works with a variety of companies earning $ 3,000,000 a year or less around La Canada, Glendale, and Pasadena.

Easy to use cash flow tool

For small business owners who can't find time to set up a solid accounting system just yet, then get started tracking cash flow on paper the old fashioned way with "Small Business Bookkeeping System Simplified."

The bookkeeping book is easy to use and understand for non-bookkeepers and accountants. On two pages it has a weekly expense and income record system to track:

• General Expenses
• Inventory Expenses
• Equipment / Property Expenses
• Payroll Expenses
• Weekly Income or Returns
• Income totals and Expense Totals

The book, and method, may seem primitive compared to programs like Quickbooks, Peachtree, etc. but it's a great tool and way to get started understanding how to track simple expenses. Plus, the only tool needed to operate it is a pen or pencil.

I picked up a 2003 copy from my local library on the shelf of business books. A current edition is available at Novapublishing.com for $ 29.95.

It's a simple way to stay organized, track expenses across different categories and hand to a bookkeeper who winds up tracking expenses in more detail in Quickbooks or some other accounting system.

Click here to read the Cash Flow Tips for Companies round up for last week.

Business bookkeeping using Quickbooks

A business owner who pays attention to the books, and even learns bookkeeping, has more control over the finances than an owner who delegates the task and then doesn't ask the bookkeeper for details.

Learning bookkeeping in a program like Quickbooks can help a business owner ask intelligent questions.

Knowing bookkeeping basics gives an owner a greater financial understanding of expenses, income and profitability. It serves in making strategic decisions.

Click here to inquire on Quickbooks and applicable discounts.

So where are bookkeepers found? Certainly through a local chamber of commerce and business networking groups.

Hiring a bookkeeper?

Ask if they have certification from an organization like the American Institute of Professional Bookkeepers http://www.aipb.org. There are 30,000 members. The mission of the organization is "to keep bookkeepers up to date on changes in bookkeeping, accounting and tax; answer bookkeepers' everyday bookkeeping and accounting questions; and certify bookkeepers who meet high, national standards."

There's also the National Association of Certified Public Bookkeepers, www.napcb.org, that has a mission "to protect the public interest by helping to ensure that only qualified individuals provide public bookkeeping services and assure the public that members are trusted and competent bookkeepers."

The NACPB has billing rates at $ 60 per hour and up.

Bookkeeping is a strategic expense for any business at any stage. For most small businesses, a bookkeeper is normally needed three hours to five hours weekly once records are in order.

A business owner who takes the time to learn Quickbooks basics can get records in order and then hand the operation over to a qualified bookkeeper.