The Top Three Bookkeeping Basics

Certainly there could be no harder task than to choose the single best from so many important, yet different, bookkeeping basics. So let me help a little and pick three, for different reasons.

#1) Get a business federal tax identification number. Otherwise known as an EIN (Employer Identification Number). Even if you don't have or never plan on having employees.

Why? Quite simply, because it is a smart safety precaution!

This way you can use your EIN for all business matters instead of your individual SSN (Social Security Number), which is something you never want to put in the wrong hands.

You may apply for an Employer Identification Number in various ways, but I recommend online at www.irs.gov . This is the quickest and easiest way to go and is a free service offered by the Internal Revenue Service. You may also want to check with your state to see if you need a state number or charter.

#2) Set-up new business checking and savings accounts. People tend to underestimate how crucial this is to the foundation of their business. But this is definitely one of the important basics.

Keeping your personal and business bookkeeping accounts separate may sound like more of a headache. But believe me; it will actually save you a headache. When it comes time to gather all of your income tax information at the end of each year, you are going to be very thankful that you had separate bookkeeping accounts from the beginning. Plus, there are very important IRS rules against the "co-mingling of accounts".

I signed up for my business bookkeeping accounts at a different bank than where I do my personal banking. Just personal preference, but I like keeping my interests separate from each other. You should do whatever makes you feel most comfortable.

I do recommend that wherever you decide to do your banking, to also sign up for online access to your accounts. I know many people are reluctant to do online banking, but I find doing my bookkeeping via online banking to be very convenient and safe. Downloading transactions can save you a lot of time and energy which you can then put toward the things you really enjoy doing with your business!

#3) Decide on an accounting or bookkeeping software . The last thing you want to spend your time doing is writing out your bookkeeping the old fashioned manual way.

There really are a lot of computer software programs to choose from. I definitely would NOT recommend MS Money for your business bookkeeping. MS Money is great for keeping track of your personal finances, (this is what I use and DO recommend for personal finances) just not for business.

Quicken is not recommended for either personal or business bookkeeping. It's oversimplified and yet not so user friendly, (go figure). I'm sure you have all heard of QuickBooks. This is what I use and would definitely recommend to you as well. It is easy to use and comes with many bookkeeping tutorials built right in.

If you are performing bookkeeping duties for multiple types of businesses, then Quickbooks Accountant would be a great choice as it allows you to import data from all the different business categories. Otherwise, choosing Quickbooks Premier for your unique type of business would be the way to go.