Bookkeeping 101: Understanding Your Balance Sheet

Oh boy… it’s typically solopreneurs who walk into this quagmire. It tends to happen unintentionally, until they learn the hard lesson come tax time or a business emergency. At this point they’ll realize they need to set up dedicated business accounts and sync them with their accounting software. Though often confused for each other, there are key differences between bookkeeping and accounting.

Choosing the right template for your business finances can give you peace of mind and help you manage your accounts with confidence. Having all your records in one place, recorded in a neat and organized format, eliminates the need for last-minute scrambling to gather information for tax returns. Bookkeeping is essential to managing your finances and running a successful business. With the help of the Protea Financial experts, you can better understand bookkeeping basics.

The first seven steps of a bookkeeping process

Missing out on any payments — even if they’re ten cents — will cause issues when you try to reconcile your books. You can even pay a bookkeeper, accountant, or third-party company to manage bookkeeping accounts on your behalf. Any record of unsold products goes into your inventory account.

• There’s nothing worse than having to search through too many statements to find one small yet vital piece of financial business that you need.
• Once you can anticipate your busy times, you can schedule your staff members accordingly.
• The Income Statement is used internally and externally to evaluate profitability and help assess the level of risk for an investor or creditor.
• When you keep track of your financial transactions, it’s easy to create and monitor budgets that optimize expenses for healthy business cash flow.
• Receipt cat is for freelancers, indie developers, or other sole proprietors who don’t want to manage complex accounting software.
• Traditionally, you would need to wait to receive your monthly bank statement and reconcile the transactions on the statement with those posted in your ledger or accounting software.
• In this article, we will guide you on how to print a receipt from PayPal.

It also involves checking for errors, learning about your specific software and looking for ways to streamline different parts of your accounting processes. A small business can likely do all its own bookkeeping using accounting software. Many of the operations are automated in the software, making it easy to get accurate debits and credits entered. When doing the bookkeeping, you’ll generally follow the following four steps to make sure that the books are up to date and accurate.

How to get started with bookkeeping

Beverages are another expense, but the good news is that liquor is a great way to boost your profit margin. Chances are you’ve noticed this already if you’ve ordered a bottle of wine. The same bottle that costs $15 in your local liquor store could cost $30 or $45 when you’re out. https://www.projectpractical.com/accounting-in-retail-inventory-management-primary-considerations/ If you’re opening a franchise restaurant business, such as Pizza Hut or TGI Friday’s, you’ll source your food directly from suppliers as instructed by the home office. But if you’re striking out on your own, you’ll be responsible for buying ingredients, possibly every day.

• Information uploaded to the cloud is safe and secure, accessible from anywhere, and can be shared with your bookkeeper for easy collaboration.
• It only works if your company is relatively small with a low volume of transactions.
• You might be an executive director, a receptionist, a program manager, or a volunteer board member.
• This account tracks the purchase of any raw materials and finished products for the business.
• In summary, AP represents the money your business owes to vendors, while AR represents the money that is due to your business from customers.
• If you don’t keep accurate daily records, then it’s a lot more difficult for you to track the financial condition of your business.
• Bookkeeping puts all the information in so that you can extract the necessary information to make decisions about hiring, marketing and growth.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, financial or accounting advice. You should consult your own accounting advisors before engaging in any financial transaction. Information provided on this blog is for educational purposes only real estate bookkeeping , and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strivers to keep its content up to-date, it is only accurate as of the date posted.