This month’s blog is featuring a guest blogger.  My dear friend Kerry Smithies, of MyCloudBookkeeping, has graciously written about some tips that she has for in-house bookkeeping.  I hope that you find it helpful.  

5 Tips for Managing Your Bookkeeping In-House

Guest Blog Post by Kerry Smithies, CPA, CA

Business is all about numbers, and your numbers are telling you a story. If you want to be in business for the long haul, you need to understand that story.

Accurate, up-to-date bookkeeping is the backbone of any successful small business. No matter what type of business you operate, an understanding of bookkeeping best practices is essential for keeping your business running smoothly, now and in the future.

If you would like to manage your small business bookkeeping in-house, keep on reading for some tips to help you be successful.

Tip #1: Use Accounting Software for Small Business

Use a recognized accounting software program.  A proper system will keep track of all your transactions, and you can easily check that your information is accurate.  You will have useful reports at your fingertips.

If you have an excel sheet you don’t have access to information when you need it.  There is no way to ensure all of the information is captured and often they simply don’t add up!

Sales Tax Filings a Breeze

When it’s time to file your sales tax everything will be captured and categorized, running the reports you need to file your sales tax returns is a click of a button.

Ongoing Support and Advice

Your tax accountant can help you throughout the year!  Dayna – or whoever you are working with – will be able to access your information and assist with planning and decision-making in real-time.  No more waiting until after year-end, when it is too late to make any adjustments.  

You can maximize your profits and minimize your taxes by making informed decisions during the year.

Software to Consider

Personally, I work with QuickBooks Online, and to select the plan best for your business here is a comparison of all of the features offered and cost at each level: QuickBooks Plan Comparison

Other alternatives include Freshbooks, Wave, and Xero – check out this list: Top 10 QuickBooks Alternatives for Small Business Accounting

The most important thing is to get started!

Tip #2: Learn How to Use the Software

Be sure that the software is set up for your business, and ensure that you know how to properly use the features.  All software looks a little different.  It is advisable to have either a software specialist or your accountant assist in the setup to ensure you are categorizing your transactions correctly.

Get Training on Your Accounting Software 

You do not have to know accounting to use QuickBooks or any other software.  You do need to ensure that you or your staff are properly trained in whatever software you select.  

Take Advantage of the Features of Your Accounting Program

There are also many time-saving automations available that will streamline your administrative time.  By working with a professional who understands your business and the options available you can find the add-ons that integrate seamlessly and automate repetitive functions so your bookkeeping time is reduced and you can focus on what you do best.

If you don’t know what you are doing, you can make a mess!

Don’t let the fear of not knowing what you are doing hold you back.  There are a plethora of resources available.

If you would like help with QuickBooks Online setup, click here.

I also have free downloads, courses, and a youtube channel:

Check Out My Cloud Bookkeeping on YouTube

Getting some training to ensure you best utilize the features available in whatever accounting software you select is advisable.  

There are many online resources provided by both the software provider and on places like YouTube. 

Tip #3: Keep Up to Date With Your In-House Bookkeeping

Once you have everything set up, and you know what you are doing, keep up to date!

Set a Schedule to Update Your Bookkeeping

Personally, I geek out and update my bank feed (the connection between the bank and QuickBooks Online) daily!  This may not be normal 🙂 I would recommend at least weekly setting aside a time to enter your transactions so that you don’t lose track of pieces of paper or miss billing for time and expenses.  

By keeping up to date you can invoice your customers or clients more regularly, and have more control over your cash flow.

Take Advantage of Automation and Apps

There are many automations available to capture information, from mobile apps for expenses and mileage to additional software such as Hubdoc and Receipt Bank that will help you to capture expenses in real-time.  

If you are using QuickBooks Online there is a mobile app that you can use to capture receipts.  If you have workers in the field and they download the app, they can snap a picture, and you can add the necessary allocations and match the expense to the transaction when it is charged to the business credit card.  This is a great feature for those who tend to either lose bits of paper or have them littered all over the floor of the truck!  

You can also “train” some applications to record recurring transactions and attach the bill or receipt to support the expense for easy access for both expense management, and a tax audit.  

One of my larger clients recently had a GST audit, expense documentation had been uploaded through Hubdoc, and attached to the expense transactions in QuickBooks.  We had easy access to everything requested by the tax office.  The audit was smooth, and the software paid for itself that day alone!

Talk to your accountant and other business owners to find out what tools they love!

Tip #4: Reconcile Your In-House Bookkeeping Monthly

After month-end carry out full reconciliation of all of your bank and credit card accounts.

By reconciling your bank and credit card accounts you will ensure that the numbers you have recorded are accurate.  This is a very important step.  During the process of reconciling, you compare the transactions in your accounting system to the numbers on your bank statement.  By doing this you can find any discrepancies.  

Find and Fix Any Errors

If you don’t reconcile regularly you may not know that you have made mistakes.  Common bookkeeping errors are entering expenses twice, recording customer invoice payments as sales, recording credit card payments to both the bank and the credit card.

Accurate Reporting for Better Decision Making

If you have mistakes in your accounting system the reports that you use to make decisions about your business will not be accurate.  For example, if you have added customer payments as sales, and not recorded them as payments to invoices it will look like your income is much higher.  If your income is higher your profit will be higher also.  After you correct those errors your profit and sales will drop, and the results of your business will look very different.  The faster you can identify and correct errors the better you can manage your business on a day-to-day basis.

Other Reports to Look at Regularly

Look over your accounts receivable report (unpaid customer invoices) and accounts payable report (what you owe to your suppliers) regularly.

If a customer is late paying the sooner you can follow up the better – it will help your cash flow, and if they are in financial trouble you will be more likely to at least get something before it is too late.

You can download my free month-end checklist here: Small Business Month-End Checklist by My Cloud Bookkeeping.  It walks through more detail on what to do on a regular basis to ensure that your books are up to date and accurate.

Tip #5: Run Your Reports and Know How to Read Them

Once you know that your numbers are accurate you can run your reports!

Understand Your Balance Sheet

A lot of business owners skip over the balance sheet.  This is where I like to start!  The balance sheet will show you “what you own” and “what you owe”.  It is a great tool to help with cash management.  Understanding your balance sheet will help you to spot trends such as increasing accounts receivable so you can follow up for collections, or a large line of credit, when you have excess cash in the bank that you could pay down to save on interest costs, for example.

Profit and Loss Will Help You Understand the Results of Your Business Activity

Most business owners are familiar with the Profit and Loss statement, or Income statement.

This is the report that shows activity.  When you look at your income statement you are looking at what has happened over a period of time.

Personally, I run the income statement by month.  When working with my clients I find that having a month-by-month view helps them to see the picture of the activity in a much more meaningful way.  You can identify gaps where you may have missed recording expenses.  You can clearly see if your income is fluctuating, either increasing or decreasing.  You can look at expense categories across the months to see if anything is increasing more than you would have expected and have a much clearer picture than when you look at the period in one column.  Give it a try – I would love to hear what you think!

Create Specific Reports for Your Business

If you have set up your software to enable you to track your sales by product or service, or if you are tracking the costs that relate to each project or customer you are working with you will have even more information you can use!  I track the hours I work on certain projects, and regularly check to ensure that my pricing is correct.  If I don’t know how long it takes to carry out tasks I am only guessing when I provide quotes to my clients.  You may think you know what it costs in materials to build something – have you taken into account that costs of some raw materials have increased 30% or more since the pandemic began?  

Make Decisions Now!

By regularly looking at your reports you are better able to make decisions now!  At the end of the year when your accountant tells you there is a loss is too late!  You have worked hard all year and missed the opportunity to maximize your profits.

If your reports don’t really speak to you, and you are not sure what you are looking at reach out to your accountant.  I LOVE working with clients to help them understand their reports.  Walking through the numbers, and seeing how they correlate to activity paints a picture of the business that enables you to make decisions in real-time.  This is where you get an opportunity to improve your bottom line – and isn’t that why you went into business in the first place!


What to Look For If You Outsource Your Bookkeeping

If you do decide to outsource your bookkeeping, having learned how to use the software, track your expenses, and run your reports is invaluable.

You will be better equipped to hire the right person for your business.

The services you can expect from a bookkeeper would include:

  • Recording transactions
  • Managing accounts receivable and accounts payable
  • Reconciling accounts
  • Sending invoices
  • Basic payroll
  • Setting up and managing your bookkeeping technology and tools
  • Preparing internal financial statements and reports
  • Working with your accountant, tax preparer, and tax planner


Work with your accountant, get the help you need to get your accounting software system set up and working for you, and schedule a regular time to keep up to date.  

Investing the time to understand how to manage your business finances is empowering and rewarding.  Learning how to read your reports enables you to better manage your cash flow, and knowing what questions to ask can alleviate the fear of numbers!

Learn More About Kerry Smithies, CPA, CA: