By taking steps to establish strong accounting processes from the beginning, small businesses and startups increase their likelihood of success. Proper management of a business’s finances, and having someone dedicated to that process, is a crucial component of success for small businesses and startups alike. Adherence to accounting best practices and hiring or outsourcing a person dedicated to this function, can help prevent the cash flow issues that are to blame for many business failures. Further, these best practices can also point the way to insights that can lead to small business growth. Here are some helpful tips.

Bank Accounts

  • Request a statement with a month-end closing date as it saves time when reconciling records with the bank.
  • Review and reconcile statements immediately as this helps reduce fraud and keeps the books current.
  • Each entity should have its own checking account, but only open as many accounts as is necessary.

Be Consistent

  • Consistency is essential to successful business bookkeeping.
  • Heading and saving your spreadsheets the same way each month thru the year will save you and your accountant time and aggravation.

Cash or Accrual

  • Cash accounting system is much simpler and will suffice for most small businesses.

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Chart of Accounts

  • A little time setting up your chart of accounts will pay huge dividends.
  • Think about your business and the information you would like to know to run it efficiently.
  • Be sure to review this with us – you want to be sure to have the right amount of detail for your business.
  • Determine expense categories by looking at tax return you will file.

Customer Invoices

  • If you use many invoices each month, you may want to have invoices preprinted, including invoice number.
  • Will look more professional and you will probably get paid quicker.
  • Print invoices with perforation — tear off and return it with payment.
  • Print your name and “remit to” address on both sides of the perforation.

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  • Deposit all cash immediately.
  • Record your daily deposit in a deposit ticket book that comes with a white (original) copy and yellow (duplicate) copy give the white copy to the bank and leave the duplicate in the book to aid in reconciliation of the bank statement.

Due Date Reminders

  • Have an electronic calendar that contains due date reminders.

Filing Paid Invoices and Bills

  • Start new file folders each year for paid invoices and paid bills.
  • May not need a folder for each customer or vendor unless there is a large volume of business.
  • Possibly get by with a folder for A – C, D – F, and so on.

Keep Good Records

  • Keep all invoices and checks in numeric order the thing to remember is never skip numbers.
  • Record voids in numeric order with other items, only denote as “voided”.
  • A healthy business is monitored through its records on a regular basis.
  • You can find problems and correct them before it’s too late.
  • Different people use different record-keeping systems what matters most is that you have a system and use it daily.

Petty Cash Box

  • Try to minimize using cash, but if you must use it get a locking metal cash box to hold currency and coins.
  • Any money used is replaced by the receipt for that purchase.
  • Cash plus receipts should remain at a constant dollar amount.
  • Continue using the petty cash box until you run out of cash.
  • Replenish the box by writing a check for “cash”, expensing all the receipts.

Storage Boxes for Each New Year

  • Keep all your records for one year together and number the boxes.
  • Bank statements, checks, financial statements, paid bills and other backup.
  • Include a copy of that year’s tax return.
  • Label with the year and contents, then store it somewhere accessible and keep a master list of the box and its content.

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