Start by implementing these 13 bookkeeping and accounting fundamentals. Generating reports at least once a month is the surest way to stay on top of your business finances, and ensure you don’t get caught out by nasty surprises. Your monthly reports should include a profit-and-loss statement and the balance sheet, as a minimum. Now you have a running commentary on how well your business is performing.
Primarily, you need to have an accurate picture of all the financial ins and outs of your business. From the cash you have on hand to the debts you owe, understanding the state of your business’s finances means you can make better decisions and plan for the future. Alternatively, in-house or outsourced bookkeepers can update your books for you, typically for a monthly fee. But whether you plan to do bookkeeping yourself or outsource it to an accountant, it pays to understand the basics of bookkeeping.
Determine how you will record transactions
With the UK Government’s introduction of Making Tax Digital being introduced in the coming years, there is a drive towards the digitisation of accounting records. That is not to say that a spreadsheet template will not be good enough, but you will require some form of bridging software. If you have a 4G enabled device, you can actually raise a sales invoice with the customer and have them pay it there and then by enabling payment via credit card or instant payment.
- Posting debits and credits to the correct accounts makes reporting more accurate.
- If you sell to customers on credit, you’ll need to send out invoices at a later date after providing your goods or services.
- This can lead to overstocking or understocking, both of which can be costly.
- If you’re going to be doing your own bookkeeping, it’s worth talking to a pro when you set up your system to make sure the accounts you create align with your industry standards and CPA expectations.
- Once you’ve found your groove and got a solid foundation from bookkeeping, then you may consider how an accountant could help you power up your small business with more knowledge of its finances.
A dedicated bookkeeper or an accounting professional should handle small business bookkeeping. This ensures accurate record-keeping, and compliance with financial regulations, and provides valuable https://www.bookstime.com/ insights for business decisions. Tracking accounts receivable ensures you know exactly what’s owed to you, helping to predict your incoming revenue and manage your resources effectively.
Keep up-to-date records
With proper bookkeeping, you can determine the types of taxes and calculate the amount payable in advance. Do you have more questions about the bookkeeping process for small businesses? Wondering how best to collect and track financial information, deal with expense management, and ensure healthy cash flow for your how to bookkeeping for small business business? Here are some of the most frequently asked questions on bookkeeping for small businesses. Accountants rely on bookkeeping records to analyze and advise on the financial activity, health, and growth potential of a business. Invoices are bills that customers receive after you’ve provided your services.