What Are the Basics of Bookkeeping?

Taxes. Receipts. Payroll. All of these subjects bring a hefty responsibility to your business plate. So, while you’re helping your clients, updating your social profile, and working behind the scenes to make your business run, you are also responsible for the little things, like keeping track of your receipts and making sure that vendors get paid on time. The truth is that you can’t do these things alone and run a well-oiled business at the same time. You absolutely do need a basic knowledge of bookkeeping, but the rest of those fine details can be cleaned and polished by your professional local bookkeeping services.

Bare Bones of Bookkeeping

Your business will usually consist of 5 different elements that flow together. These 5 elements are important for you to know, not just a major part for your bookkeeper. These elements are assets, expenses, equity, liabilities, income/revenues.

• Assets are anything in your business that are of value to you. This goes for money from customers, furniture, accounts receivable, and even bank accounts and inventory. 
• Income/Revenue is one in the same, and is any money accrued by your business. This can be through rendering services for selling your products. 
• Liabilities are any debt owed by your business. Accounts payable balances and any other loans that the business owes and what you owe to your vendors that you would be liable for.
• Equity is the total amount after you subtract your business liabilities.
• Expenses, such as the employee salary or your electric bill, are all of your expenses gathered.

How You Can Prepare Your Business

Again, while leaving the fine details up to the professional local booking services, you can still familiarize yourself. 

Break out your chart of all of the accounts you have within your business. You can set it up on software on your computer or by a ledger book from a supply store. Setting up your accounts is crucial to organization and accurate recording of transactions. It is your responsibility to record every single financial transaction. It is wise to keep your receipts in case you’re not always able to do so. That is where your local bookkeeper comes in to make sure these transactions are recorded accurately. Transaction recording can be as simple as invoice preparation for each vendor, customer, or product that is sold. You’ll need to record a date, the account, and whether it was by cash, credit or debit. Reconciling your bank accounts is another important step for accurate cash balance. This can be done using a quick and easy software program, or one of your bookkeeping or accounting services can help you. And finally, you’ll need to run the financial statements when you close out the month. Once all of these three steps have been in order, you’ll need to print out these statements. Software makes this process simple and fast, but if you are used to using a manual ledger, have a professional bookkeeper assist you. The basic financial statements may include your cash flow statements and income statements, as well as your balance sheet.

With all that’s on your plate, you don’t want to handle the whole gamut. You just want to be in the know. The best way to do this is to take some time with your bookkeeper. Whenever they’re at your business, ask questions that will help you become more familiar with your business in a technical way. Ask them how you can make better business decisions regarding certain vendors, products, workflow, payroll, etc. They will inform you to keep accurate and precise records of all your financial transactions. Our team at Aqtoro will help you close out the month and run the financial statements accurately and efficiently. For more information, schedule a no-fuss appointment today!