How Often Should You Update Bookkeeping Records?
Having current books is the most important thing a small business owner needs, in order to run a successful business. It provides you with a clear picture of the intricacies and health of your business. Whether it’s keeping track of cash flow or making important business decisions, the frequency at which they are updated plays a giant role in the accuracy and impact of those decisions. Understanding why and how often your books should be updated can help with organization, timely payments, and easy tax filing. All which ultimately can lead to less stress on the business owner and promote a flourishing business.
Why Bookkeeping Frequency Matters
Your business’ books, for them to be useful, should be updated on a regular basis. You want to be able to look at your P&L or Balance Sheet and get an accurate picture of how your business is doing and make adjustments along the way if necessary. Trying to make business decisions based on old or inaccurate data can greatly affect the success of your business by creating stressful situations like cash shortages or missed bill payments.
Regular upkeep of your books helps you:
Maintain cash flow visibility
To find mistakes and errors earlier
To staying on top of Accounts Payable and Accounts Receivable
Make required tax filings stress and error free
Falling behind in your bookkeeping allows uncategorized transactions to pile up and makes monthly reconciliation more difficult. Regular updates make your business records more manageable, and it helps to catch any potential errors early, so they don’t become overwhelming and harder to fix in the long run.
The most important reason for having regularly updated books is for business decision making and business growth purposes. With accurate bookkeeping, you can confidently plan, adjust, and grow your business using your real business-based data and take the guesswork out of it.
Daily Bookkeeping Tasks
Some quick and easy tasks for you to do daily to manage your records are:
Review your bank and credit card activity (connecting business accounts to the QBO bank feed gives you all your transactions in one spot for easy access)
Recoding your daily sales (including cash, card, and online payments)
Sending invoices and tracking payments received (also tracked in QBO)
Match receipts for transactions that require it.
These daily updates are more geared towards businesses that operate on the cash basis side of bookkeeping like retailers, coffee shops, online businesses, and other high-volume operations.
Weekly Bookkeeping Tasks
This is the sweet spot for most small and service-based businesses. It gives you both benefits of staying current and managing your time effectively and efficiently.
Weekly task should include:
Updating the bank feed
Reviewing and categorizing transactions
Following up on any invoices or bills that may be outstanding
Weekly checks and updates to your books help you stay proactive and not reactive when issues arise. If you do happen to find an error or an unpaid bill, it allows you to make that correction early to prevent possible penalties or late fees. Staying on top of these weekly checks can also help mitigate time spent on your monthly tasks.
Monthly Bookkeeping Tasks
Every small business owner should be going through and updating their records at least once a month, bare minimum. It helps owners to see the bigger picture of how their business is doing and helps with catching errors before they get too far and become costly and complicated to fix. They are also good to review for planning purposes.
Regular monthly tasks include:
Reconciling bank and credit card statements to make sure business records match bank records.
Reviewing Profit & Loss (P&L) Statements and Balance Sheets
Setting money aside for taxes based on income and expenses
Monthly bookkeeping allows you to turn your business dealings into a snapshot of how your business did for that month. It can give you insight into certain trends or tell you where you can adjust spending if certain items are not selling well. It will help you make informed decisions as to what next steps you need to take to scale and grow your business at the speed and scale you desire.
Quarterly and Annual Required Bookkeeping Tasks
Quarterly and annual bookkeeping focuses more on finding and reviewing financial trends and adjusting business strategies to meet desired outcomes, along with closing out the year and preparing tax filings.
Quarterly tasks may include:
Preparing and filing quarterly tax returns with your CPA
Reviewing business trends and performance
Making adjustments to budgets
Reviewing Accounts Receivable (A/R) and Accounts Payable (A/P)
Annual tasks may include:
Preparing year-end Profit & Loss (P&L) Statement and Balance Sheets
Reviewing the years transactions and making sure they are properly recorded
Gathering and organizing documentation for tax filing
Working with an accountant to make sure all business finances are accurate and ready for filing
Quarterly reviews of your books help to make sure your books stay error free and updated while also giving you some insight into how your business is doing. This allows you to look back over the course of the last few months and make the necessary adjustments to establish your short-term goals. It allows you to make corrections early and helps you plan when you can see financial trends.
Annual bookkeeping shouldn’t be too complicated since most of the work will be done while working with your accountant. However, if daily, weekly, and monthly bookkeeping isn’t managed properly, this could be a different story. Avoid potential delays by ensuring your books are kept clean and accurate monthly.
Factors That Determine Your Ideal Frequency
Finding the right bookkeeping schedule for yourself and your business depends on several factors unique to your business, including:
Business size, complexity, and transaction volume
Businesses with more sales or expenses will be better off with a more regular update schedule
How your business receives money
Businesses with heavy cash or card transactions may require daily or weekly bookkeeping while accrual-based businesses may do better on a monthly schedule
Bookkeeping software or automation
Bank feeds, automated categorization, and recurring invoices can help save time by keeping manual bookkeeping down.
Payroll, inventory, or tax complexity
Businesses with employees, inventory, or tax obligations will usually need more frequent bookkeeping.
Consistency is everything. Choose a schedule that works for you and your business and stick to it. Being consistent with frequent updates helps to keep your books accurate and manageable.
Signs You’re Not Updating Your Books Often Enough
These are telltale signs that you may not be updating your books often enough:
Frequent missing invoices or receipts
Confusion during tax preparation
Inconsistencies in your Profit & Loss (P&L) Statement and Balance Sheets
Falling behind on client billing or vendor payments
These issues normally spring up when transactions have piled up making records management almost impossible. When bookkeeping is pushed off, it becomes more difficult to get an idea of how your business is doing financially. It also makes becoming organized and catch-ups a nightmare. If any of these situations sound familiar, increasing the frequency of your bookkeeping—or getting support from a professional—can quickly restore clarity and reduce stress.
When to Consider Hiring a Bookkeeper
Eventually you may get to a point where managing your own books becomes inefficient. Hiring a professional bookkeeper can help remove some of the stress and free up your time so you can focus on growing your business.
You may want to consider hiring an outside professional if you're running into any of the following:
Your business is growing
You’re always falling behind on your bookkeeping tasks.
You’re not sure that your Profit & Loss (P&L) and Balance Sheets are accurate
You want or need more time to deal with day-to-day business operations
Professional Bookkeepers help to make sure that your books are accurate and stay that way in a consistent and timely manner. Outsourcing bookkeeping can be seen as a long-term investment that frees up the business owner to focus on the things that they want that will help grow and scale their business.
