Recording Day-to-Day Transactions
Five Tips for Allocating Transactions Correctly — Every Time
Set up rules: Setting up rules will help you to allocate transactions automatically (so long as your software has this feature, of course). For example, set up a rule so that payments to Telstra automatically get allocated to ‘Telephone Expense’.
Record default expense accounts for suppliers: If your accounting software doesn’t let you set up rules, record default expense accounts for each supplier instead (if you can, that is!).
Work out where to allocate tricky transactions: If you’re not sure what account to allocate a transaction to, allocate the transaction to an expense account called ‘Suspense’ (create an account by this name if you don’t have one already). At the end of each month or quarter, ask your accountant for advice on how to allocate these transactions. This method is much better than random guesswork, and every time you follow this process you’re more likely to know what to do next time.
Separate personal transactions from business transactions with a new bank ...