Bookkeeping Made Simple
Introduction
Bookkeeping is the process of recording financial transactions, analyzing them and summarizing them. Bookkeeping helps you to organize your business finances and make sure that nothing goes unnoticed. It's important for every business owner to understand their overall financial situation and how it changes over time. But it isn't always necessary to hire an accountant or even outsource bookkeeping services if yours is a small business or startup company, which means there are many ways you can get started on your own!
What is Bookkeeping?
Bookkeeping is the process of recording, summarizing and reporting business transactions by a person or group in a systematic manner. Bookkeeping is also called accounting. A business needs to keep records of its financial transactions so that it can report them to its shareholders and other interested parties, such as government agencies, banks and suppliers.
Bookkeeping records can be used for many purposes:
To provide information about how profitable the business has been since its inception (profit-and-loss account)
To provide information about how much money has come into and gone out of the business (cash book)
To prepare information that can be used by management to prepare budgets (bank reconciliation statement)
What are the Basic Bookkeeping Functions?
Bookkeeping is the recording and summarizing of financial transactions. It is essential for any business to have accurate records, so that they may prove they were acting responsibly and following the law when paying taxes. Bookkeepers are responsible for preparing financial statements and reports that provide information on a business’s assets, liabilities, income, expenses, and equity (or net worth).
How can I keep my business organized and up-to-date?
Keep your business organized with the right bookkeeping software. You can decide on a software that works with your computer or mobile device, or you can choose one that allows you to keep your data online. It's important to find something that matches your needs, such as QuickBooks or Xero. These programs will help you organize all of the financial information in one place so that it's easy for you to access when needed.
Organize receipts by month and year (i.e., January 2016) and put them in their own folder in a filing cabinet at home so they won't get lost. This way if something happens and needs to be reimbursed quickly, it won't take too much time trying to find receipts for reimbursement purposes through an overflowing inbox filled with work emails, personal emails and other important documents related only remotely—if at all—to running the business itself!
Use Google Calendar to help keep track of dates such as billing cycles when service fees are due; payments need making; invoices need mailing out etcetera). And use Trello (or another similar system) so employees know what tasks need completing each day/week/month etcetera: this will save lots of time later on when trying figure out where certain things went wrong if anything does go wrong :)
Getting Started with Bookkeeping
Here's what you need to know about bookkeeping: it's not just for accountants anymore. Bookkeeping is a task that every small business owner should be able to do themselves. The truth is, many people who use the term "bookkeeper" mean "accountant." While there are some similarities between the two professions, they have very different skillsets and responsibilities.
Accountants can perform tax planning; they can prepare financial statements or offer advice on how to structure your business so that it meets legal requirements and minimizes risk. A bookkeeper, on the other hand, handles day-to-day operations like payroll and accounts payable/receivable—they're focused more on process than strategy (but still important). If this sounds like something you'd like to learn how to do yourself rather than hire someone else for it, keep reading!
You can learn how to do your own bookkeeping.
If you're a small business owner, it's important to learn how to do your own bookkeeping. Not only will this save you time, but also money. In fact, if you hire an outside company to do your accounting, they may charge anywhere from $200 per month all the way up to $1,000 per month depending on their level of expertise and experience.
As a small business owner who has learned the bookkeeping ropes yourself (or with the help of a friend or family member), here are five things that have helped me keep my costs low:
I use QuickBooks Online instead of paying for a desktop version;
I use free apps like Mint or PocketSmith instead of paying for software or subscription-based services;
I keep track of expenses on receipts as soon as possible so that I don't lose them later when filing taxes;
When making large purchases such as furniture items from Amazon or appliances from Lowe's Home Improvement stores like Lowes.com or AppliancesConnectionnow.com (two very competitively priced websites), consider buying used versions instead because they still work just fine but cost much less than new ones would;
Conclusion
Bookkeeping can be intimidating, but with the right tools and information, you can learn how to do your own bookkeeping. We hope this article has helped you understand what bookkeeping is and why it's important for self-employed individuals or small businesses owners. If there are any questions about setting up your own books that we didn't cover here, don't hesitate to reach out!
