Bear in mind that, in the world of bookkeeping, an account doesn’t refer to an individual bank account. Instead, an account is a record of all financial transactions of a certain type. At a certain stage of your business growth, you’ll need an accountant to help you with reconciliation, taxes, or understanding your finances better. However, we hope that by covering the accounting and bookkeeping basics you’ll feel more empowered and confident in looking after your business financials. For small businesses aiming at more accurate accounting, a double-entry method is a better choice. If you think that means double work, don’t worry, with the right software, you don’t actually need to physically input transactions into two separate accounts, as the software does everything for you.
This part is important because the numbers you have in your books should match by doing physical counts of the inventory on hand. The above terms are really the most basic bookkeeping terms you should be aware of – to begin with. To continue learning more bookkeeping phrases along with easy-to-understand definitions, than be sure to check out and bookmark our glossary blog which we regularly update so you’re never left confused. The final stage of the accounting cycle is to balance the books and reconcile them with your bank account.
Basic Tips on Getting Bookkeeping Right
From payroll taxes to managing invoices, efficient bookkeeping smooths out the process of all your business’s financial tasks and keeps you from wasting time tracking down every dollar. Once your business gets under way, you can make a monthly budget to track your cash inflows and outflows. You’ll also need to give some thought to how you plan to invoice your clients for your services. That includes choosing when to send invoices, how quickly you expect small business bookkeeping them to be paid, and which payment methods you’ll accept. We’ve already mentioned at the beginning of the small business accounting basics that there are three major statements, such as a balance sheet, income statement, and cash flow statement. Accounting software dramatically enhances the management of your books owing to its inbuilt logic (such as double-entry accounting method, etc.) that allows for understanding and categorizing entries.
- Spreadsheet software is a means of keeping your accounting data in electronic tables, such as MS Excel or Google Spreadsheets.
- Create smart rules with Synder that’ll follow the if-then chain of events.
- When you keep detailed, organized records of your business transactions, tax season suddenly won’t feel like such a daunting chore.
- Though you may not work regularly with a tax specialist year-round, you’ll want to connect with one sooner rather than later so you’re not rushed come tax time.
- All of the products your business has in stock (whether they’re sitting at the back or still sat on the shelf) need to be carefully tracked and accounted for.
- One good place to start your search for a bookkeeper is through Quickbooks.
- You can also use apps like Shoeboxed, which are specifically made for receipt tracking.
An audit trail means you’ll have your invoices in order and you can retrace your steps easily if there’s one tiny error. Although, make sure you keep your records organised all the time and not just as a one-off. Direct deposit funds may be available for use for up to two days before the scheduled payment date. Double-entry is more complex, but also more robust, and more suitable for established businesses that are past the hobby stage. The IRS also has pretty stringent recordkeeping requirements for any deductions you claim, so having your books in order can remove a huge layer of stress if you ever get audited.
Set up accounts for recording transactions
A program like QuickBooks cloud accounting software, for example, can help you track income and expenses much faster than you could with a traditional ledger. Since good record keeping relies on accurate expense tracking, it’s important to monitor all transactions, keep receipts, and watch business credit card activity. Many bookkeeping software options automate the tracking process to eliminate errors. Fortunately, small business owners don’t need to be experts in mathematics to find success when doing their own bookkeeping. There are many ways to divide bookkeeping responsibilities and leverage powerful technology and small business accounting software for more accurate expense tracking.
