One of my all-time favorite vacations was spent in Yosemite National Park in California several years ago. One summer there was a fire that started when a single tree was struck by lightning. It grew to the size of Chicago and became larger than the size of San Francisco, Oakland and San Jose combined. I was praying that they would somehow be able to contain it. It’s shocking how “one” lightning strike can do so much damage.
“One” is also a key number in bookkeeping and accounting for not making it complicated according to David Worrell writer for Allbusiness.com. Let’s start with bank accounts. You only need one. For business you do not need a savings account. Some people think that they need a separate account for payroll or even tracking other expenses, but it’s not necessary.
Only one person should have access to a debit card. If several people are using the debit card it can be challenging keeping track of the receipts and the cash flowing out of your account. Before you know it you’ve lost track of your balance and you’ve bounced checks and have higher fees.
How many credit cards should you have? You only need one. If you have more than one that means a website for each, password, credit limit, a paper statement, fees and payment date. Keep only one credit card, if necessary, and you will only have one payment date and can track everything in one place.
How many days a week should you write checks? You guessed it, only one. Instead of paying every vendor immediately it’s okay to let them know you only cut checks once a week or better yet, once a month if you can. When you group your payments this way you will see exactly how much money you have, how much you need, and who can wait until next time. Bounced checks will be a thing of the past when you are able to handle your bills all at once.
How many people have check writing authority? Only one. If you are paying many vendors it is best to delegate this to an accountant or a full charge bookkeeper, however, do not delegate check signing authority. Have the checks brought back to you for review and your signature. If the checks are cut only once a week you can quickly spot duplicates, mistakes, and missing payments.
If you are a small or mid-size business keep it simple. Don’t let anyone talk you into multiple accounts like large corporations have. They also have a team of accountants. Just remember One.
For additional information or to answer any questions please contact Sheryl Lucchese, 502-295-3538, sheryl@accountinglouisville.com.