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If you look at the activities entrepreneurs are most often behind on completing, they’re usually related to accounting. (I blame the fact that it’s a tedious and time-consuming task, lacking the reward of additional income.) I’m not sure if balancing our books is scary because it seems complicated, or because we’re afraid of the bottom line — but you can take the sting out of both with organized recordkeeping.

Complementary Systems

Using a computer program to track income/expenses not only makes tax time easier, it also allows more accurate projections and reports about your financial situation. But you still need a system for organizing your small business accounting paper trail — the best solution is one that mirrors your electronic system by the same chart of accounts, the same categories, and the same accounting structure.

Tracking Income

When customers pay you with a check or credit card, it’s a good idea to keep a hard copy of the sales receipt and proof of the payment method. (I can’t tell you the number of times that one of my business coaching clients had a problem with a received payment — and one little piece of paper saved the day.)

If the bank accidentally deposits your money into someone else’s account, or credits you the wrong amount — having a copy of the check can help correct the problem more quickly. Should a customer dispute a charge or claim that you processed a fraudulent purchase — your merchant account may require a signed credit slip in order to rule in your favor. Take a picture of each document and store it in your electronic files. Or clip a hard copy of the payment proof to each client invoice — then file either chronologically (by month) or alphabetically (by the name of the customer). You’ll be glad you did if you need to refer back to this information later.

Tracking Expenses

As I mentioned earlier, your expense files should mirror your company’s electronic chart of accounts. However, you don’t have to get quite so detailed. The trick is to set up more generalized filing categories, that allow you to group several types of expenses together into one folder:

Use whatever categories make sense to you — just remember that the goal is for you to be able to easily find an expense record if you need to refer back to it in the future. If that means organizing your bills by month so that all of January’s paperwork is in one file and all of February’s is in another, fine. As long as you can locate what you need down the road.

Tax Records

Another part of your small business accounting responsibilities is to file notices and statements that relate directly to your taxes. The simplest solution is to have a catch-all file called “current taxes” — when tax time rolls around, you can hand this data (whether paper or electronic) to your accountant, easy as pie. Of course, you’ll also want to have separate files for storing previous years’ returns and supporting documents. (Those can go in your archive files, rather than your active storage system.)

Saving Time Means Saving Money

Just taking a few minutes a month to organize your financial paperwork and update your small business accounting files will save you heaps of stress, come April 15th. You’ll also have a clearer idea of your bottom line, be able to pay bills on time without late fees, know which customers owe you money, and avoid any nasty financial surprises.