Bookkeeping Best Practices

Reading Time: 5 minutes

Bookkeeping involves dealing with a lot of numbers, which is why it is advised to establish routine checks for your accounting books to avoid anomalies. All businesses try to achieve a proper bookkeeping system because it increases the accuracy and efficiency of accounting records and helps companies grow.

According to a survey, small business owners almost spend more than 120 days dealing with their bookkeeping and administrative tasks. To save your time, we have listed some of the routine checks to follow that can help you avoid monetary penalties from regulatory institutes.

Bookkeeping Best Practices

It is important to note that your practices may differ depending on the size of the organization and the scale at which you operate. While we have listed some of the generic bookkeeping tasks, we suggest consulting with a CPA while maintaining your accounting books, and considering hiring a third party CPA as your bookkeeper.

You can get the following benefits while consulting with a CPA:

  • Regulatory Compliant: since a CPA is well-versed with the IRS rules, he/she can help you to maintain your accounting books in compliant with the laws.
  • Saves Money: with the help of a CPA, you can follow the right direction of maintaining all the cash outflows that may result in tax credits and deductions.
  • Saves Time: small business owners spend hours keeping a check on these records, and a CPA can save you time to improve efficiency in the system.
  • Focus on Your Business: The biggest benefit in hiring a CPA to handle your bookkeeping is time to conduct and grow your business, and with ongoing reporting you’ll have a clear picture without ever having to worry about your books.

In the coming section, we have listed some of the general bookkeeping practices to maintain:

Maintain Up-to-Date Financial Records

While this may seem very generic, but making updating your financial data on daily basis needs to be your top priority to avoid any legal consequences.

In 2016, the US Securities and Exchange Commission (SEC) penalized sportswear retailer Under Armour $9 million for hiding its practice of forwarding revenues from future quarters to the current quarter in order to claim boosted sales.

The serious legal and financial consequences faced by Under Armour can be attributed to its failure to update financial data in a timely and accurate manner and disclose its sales practices. This emphasizes the significance of storing and routinely updating financial data.

In addition to legal consequences, updated financial records can help you with the following areas:

  • You can determine trends in financial data that can help you allocate your resources efficiently.
  • You may avoid the last-minute hustle to compile all the necessary information during tax filing.
  • You can optimize your operations. For instance, if a product of your company is not selling well you might downsize that product line.

Make Daily Deposits

Daily deposits guarantee accuracy and accountability. Financial records can be kept organized and updated with the help of daily deposits.

It is simpler to detect any discrepancies or irregularities in the financial records by regularly depositing money.

Not only does it assist with accountability, but it also aids in accurately reporting your taxes. For instance, if you intend to file your tax returns for a particular period, you must properly account for all deposits. Misclassifying deposits into an incorrect time period could lead to the submission of inaccurate income information to the IRS.

Furthermore, if the IRS detects some anomaly in your income, you may need to face the following penalties:

  • A 20% of the understated tax.
  • Civil fraud penalty.
  • Criminal penalty.

If you have any unpaid bills then clear them on a regular basis before you end up with a pile of bills to pay and unheard regulations to face.

Record Every Single Transaction Accurately

Due to the inaccurate recording of supplier rebates and discounts, the British retailer Tesco was involved in a scandal over its accounting procedures. Not only the company faced monetary penalties, but the reputation of the company was damaged as well.

However, this serves as a popular example to learn from! Recoding your transaction in an accurate way can save you from huge accounting errors.

Moreover, if you are unsure about how to record transactions accurately, we’d suggest consulting a CPA.

To maintain the data of all the financial reports and records, transactions inside a business must be meticulously recorded. You need to keep track of every transaction that takes place in your business’s bank account.

This covers all monetary transactions, including deposits, withdrawals, invoices, and transfers. Also, having a physical or digital record of your transactions might be beneficial for tax preparation and an audit.

When it comes to expenses, make sure you log and file all receipts!

Categorize Your Transactions

Every transaction must be properly documented and classified. The activity helps you quickly identify and correct any errors, and helps you prevent manipulation in the accounts due to a misplaced entry. 

You need to confirm all entries get recorded in the correct balance sheet and income accounts. Balance sheet items will include assets, liabilities like inventory or cash, and loans or accounts payable.

Income statement items will include revenue, expenses, and any gains. If you are not sure about how to correctly categorize items in different accounts, then you can consult our CPA.

If you end up doing something unlawful on your own, then you might get into trouble like many other companies in the past.

For instance, Wells Fargo, a financial services provider, was involved in the fraudulent activity because of the insufficient classification of transactions in Wells Fargo’s financial records.

Companies must classify their transactions depending on their origin and purpose in order to prevent financial errors. 

Record Accounts Payable Invoices

Every bookkeeper should be aware that one of their primary duties is daily account payable invoice recording. Maintaining daily accounts payable records can help a company in the following ways: 

  • Verification of all invoices being received and paid on time.
  • An efficient way to measure what you owe to the suppliers.
  • Gives managers a proper picture of the cash flows of the company.

If you don’t follow proper procedures, then you might find yourself in a great deal of trouble. For instance, Enron declared bankruptcy after its significant accounting scandal was revealed. The business has been hiding its mounting debts and losses behind a complex web of dishonest accounting techniques.

Delaying the recording of its accounts payable invoices was one of Enron’s main strategies for hiding its financial issues. The business ultimately collapsed as a result, and numerous Enron officials were charged with various crimes.

Record Accounts Receivable

You can keep track of who owes you money and how much by reviewing accounts receivable items like unpaid invoices on a daily basis. This information is essential for managing your cash flow and ensuring that your business is running smoothly.

Moreover, this data can be used to contact clients who have not paid on time, send them reminders, and take any necessary steps to recover the debt. 

Make Your Payroll Regulatory Compliant

Daily payroll recording is a crucial component of bookkeeping since it enables companies to monitor employee remuneration and related costs.

The number of hours that each employee works must always be precisely recorded. This guarantees that everyone is paid the correct amount for their labor.

You must always keep a copy of the most current payroll for each employee on hand so you may refer to refer it for legal processes if necessary.

While updating the payroll with all the information may seem routine, it can have serious legal consequences if you miss out on the important information

For example, even categorizing employee have impacts on your taxes. The more information you have, the better it is for the company records!


Are you feeling overwhelmed by the complex bookkeeping laws and regulations that govern your business? Don’t worry, our team of expert CPAs can help!

With over 20 years of experience and hundreds of satisfied clients, we have the knowledge and skills to help you keep your books in order.

Don’t just take our word for it – we have over 100 five-star reviews on Google from happy customers who have seen the benefits of working with us.

From accurate and timely financial reporting to personalized support and guidance, we’re committed to helping you achieve your business goals.

Sign Up For Our Weekly Newsletter
Based on 107 reviews
powered by Google
Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive... experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable more
Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most... humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah more
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a more
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad more
See All Reviews

Crypto Tax & Accounting Newsletter Signup


Cross-Border Tax Newsletter Signup