Bookkeeping basics: A guide for small businesses

But it’s in the 15th century that the roots of modern bookkeeping can be found. And fittingly, there are two entries in the history books for who documented the double-entry system. Some credit Benedetto Cotrugli and his 1458 book Of Commerce and the Perfect Merchant. But most regard Luca Pacioli as the father of bookkeeping, for his 1494 book Review of Arithmetic, Geometry, Ratio and Proportion. This is particularly true once the business accounts for its operational costs and recurring expenses. Once you’ve got a handle on how to begin bookkeeping for your small business, it’s time to set yourself up for success with an ongoing bookkeeping system.

Balance your books

By being proactive with your bookkeeping, you’ll save your small business time when it comes to taxes. Simply turn your financial statements over to your CPA or other tax filings expert, and let them handle the rest. Maintaining bookkeeping tasks is essential for the stability and success of small businesses.

DIY vs. professional bookkeeping

• If you don’t feel comfortable with a freelancer, there are many firms that offer bookkeeping services as well.
• The NACPB offers a certified public bookkeeper (CPB) certification, while the CPB offers a certified bookkeeper (CB) certification.
• There are professional associations that can provide bookkeeping training and certification.
• You can learn bookkeeping for free and at a low cost through online courses.
• Businesses might not want to keep all cash in the bank, as having an excessive amount of cash in the bank could mean missed opportunities in investment income.
• At the end of the appropriate time period, the accountant takes over and analyzes, reviews, interprets and reports financial information for the business firm.

Intuit Inc. does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. If you’re like most modern business owners, odds are you didn’t become one so that you could practice professional-level bookkeeping. Outsourcing the work to a seasoned bookkeeper can allow you to focus on your business plan and growth. But if you have the time to dedicate to updating your books regularly, doing your own bookkeeping may be feasible. You may be hoping for the best and have a few college courses in your back pocket. Even with these tools, you may not have the expertise you need to handle the responsibilities of a bookkeeper.

Coordinate with a tax specialist

For the past 52 years, Harold Averkamp (CPA, MBA) hasworked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. If you go this route, make sure to brush up on interview questions that’ll help you determine who’s the best fit. When you enroll in the course, you get access to all of the courses in the Certificate, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page – from there, you can print your Certificate or add it to your LinkedIn profile. If you only want to read and view the course content, you can audit the course for free.

It’s important to track your AR to ensure you receive payment from your customers on time. Keeping up with the records in your small business might be a task you are willing and able to tackle yourself. The system you choose to use doesn’t need to be complicated and the ledgers should be straightforward, especially if you have just a few or no employees. The most important parts of doing your own bookkeeping are staying organized and keeping track of the details. However, it’s important to note that your bookkeeper won’t be the only person working on your business finances. So you’ll want to understand which tasks your bookkeeper is and isn’t responsible for handling.

Step 3: Choose an accounting method: Cash or Accrual

Keep reading

Create financial reports.

• It also includes more advanced tasks such as the preparation of yearly statements, required quarterly reporting and tax materials.
• We provide Local (Los Angeles) and World Russian and International News, Videos, Business Directory, Classifieds Listings, Business and General Statisticts.
• Since the IRS accepts digital records, it’s smart to use a cloud-based system like Dropbox, Evernote, or Google Drive so you never have to deal with smudged receipts.
• Because of these factors, advancing your bookkeeping career to a role in accounting can be advantageous.
• Most businesses now use specialized bookkeeping computer programs to keep books that show their financial transactions.
• You typically maintain accurate accounting records across all transactions while communicating with others.
• Bookkeepers have to understand the firm’s chart of accounts and how to use debits and credits to balance the books.