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Bookkeeping Basics for Small Business Owners

if you’re a small business owned and wishes to do your own bookkeeping but don’t know how this video is why you consider this your bookkeeping 101 crash course now at workbench we’ve done the books for hundreds and small and medium-sized companies bookkeeping may not be the most exciting thing ever but we’ve got it down to the science in this video we’ll teach you what bookkeeping is why bookkeeping certainly matters and the seven steps to doing your own bookkeeping bookkeeping is defined as the process of tracking all of your company’s financial transactions so you can see exactly where your business is spending money where your revenue is coming from and which tax deductions you’ll be able to claim that’s a lot of words but why does bookkeeping topic for your small business number one bookkeeping materials because it helps you catch more tax deductions when you record and categorize every transaction in your business you’ll be able to see which expenses are tax deductible so that good-for-nothing dies through the crannies without year-round bookkeeping you’ll forget about one-off rebates like lunch with a purchaser eight several months ago that you could have withheld even with the best of intentions rebates will ever all through the rifts at imposition term unless you have bookkeeping in place number two bookkeeping stuffs because it can help you get a business loan if you’re applying for a small business loan banks are going to need to see financial statements and I don’t merely planned the different types that you can download from your online banking you’re going to need to have something that shows your overheads and income otherwise known as an income explanation this is something you’re going to be able to get through bookkeeping number three bookkeeping contents because it can help you catch monetary mistakes when your bookkeeping you’re continuing a close heart on the transactions in your business which means you’ll be able to catch things like Bank lapses statement mistakes like paying mortal twice and cowardly due costs for services that you forgot to cancel number four bookkeeping topics because it gives you a clear picture of where your money is going when you have bookkeeping in place you’ll be able to keep track of your expenditures so you can budget better you’ll likewise be able to understand your cash flow so you can see what’s an expense versus support payments to a credit or a credit card you’ll also be able to track how your firms grow and improvement of over experience and what months are busy and sluggish this will help you plan for the future don’t worry about taking notes everything we’re about to say is in our leader bookkeeping essentials for financiers you’ll learn the link in the description below now the first step to doing your own bookkeeping is separating your business and personal outlays you’ll want to make sure that your business and personal transactions are not intertwined so it’s clear to the IRS what your business is paying spending and then what your bottom line net profit is this is especially important for C corporations to have separate bank account for companies and personal finances consider Corpse open themselves up to legal questions when their finances aren’t separate from personal events the second largest step is to choose between single entry or double entering accounting doubled entryway is a system of accounting that ways where your coin comes from and where it’s going to essentially you record every deal twice taking assets from somewhere called a credit and putting it somewhere else called a debit your debits and credits should ever equal each other that’s how you know that your records are offset for example say you buy a new laptop for your business and it costs $1000 you’d subtract $1000 in cash from your credit account and add $1,000 in assets to your debit account you may have lost $ 1,000 in currency but you gained $1000 in the shape of a new resource double entryway accounting is various kinds of like double checking your homework and helps you create financial statements which you’ll need to conclude smart-alecky business decisions so what is a single entry method it’s essentially time recording your business once as they happen it’s less robust but if your business is a simple sole proprietorship with no stock-take and no works you can probably use the single record method if your business is any more complex than that your controller will probably recommend the double entry method the third step is choosing between the money versus accrual method of accounting on a cash basis you exclusively recall income when you receive it for example when you lodge the check into your account on an accrual basis you recognize revenue when it’s earned for example formerly you end a project and write the debit if you’re a small business or just the beginning.

you can probably use the currency programme it’s easy to switching from money to accrual whether it is necessary to if your business is more complex for example if your business more than five million per year in revenue or if you oversee big assets or financings you’ll probably got to go to the accrual method either way you should talk to your accountant to figure out which programme is likely to be best for your business step four is to choose a bookkeeping arrangement your alternatives are to do it manually employing something like Excel or exactly article or use an accounting software if you do it in Excel you can use something like our free income word template for a simple bookkeeping setup all you have to do is enter each deal as it happens if your bookkeeping signifies are straightforward this is the easiest cheapest way to go you can download this excel template by clicking the link in the description below if you choose to use accounting software there are a few options for small businesses such as QuickBooks Xero or wait you’ll remuneration a monthly fee for the application which you can use to produce simple financial reports keep in mind though you may need to have an accountants help to learn how to properly use the software step 5 is to categorize your business lists are essentially categories for your transactions to understand what you’re spending on these types of lists can help you understand what your tax deductions are not all transactions are equally tax deductible so you’ll want to know what you’re spending on office supplies versus what you’re spending on dinners for example if you buy a chest and writes for the position you’ll categorize it as office supplies at the end of the year you’ll be able to see the total amount you spent on office supplies and you’ll be able to deduct that expense on your taxes step 6 is to organize and store your papers you need to keep records for your bookkeeping but there’s a bit more to it than time accumulating all of your receipts in a shoebox there are two important rules for your record-keeping rule one if the expenditure is over $ 75 you are able to continue a record to prove the expense regulate two you are able to preserve every acknowledgment and monetary record for three years as for actually keeping the records we recommend collecting them digitally the IRS is totally fine with that and it’s an easy away for you you won’t need the receipts to actually file your taxes but you will need them if you get audited some implements you can use to keep your records digitally include receipt banks Evernote and shoebox finally the last step is to make it a dres what remaining isn’t the most exciting thing but if you do it generally you’ll have smart-alecky monetary insight into your business every month of its first year and you’ll save yourself a great deal of time and headaches come tariff season at minimum we recommend entering in all your business at least once a month block out a recur time in your docket and do it somewhere recreation like a coffee shop or do something relaxing like putting on netflix while you do the succeed the more automatic your bookkeeping attire the easier your tariff season will be nobody likes a stressful bookkeeping binge now should be used do your own bookkeeping or hire someone else to get it on for you doing your own records is free that’s the biggest select but it can be complicated time-consuming and can take you away from extending your business if you’re interested in doing your own bookkeeping click the link in the description for a free income testimony template created by our expert in-house bookkeepers here at bench if you decide to hire someone to do your bookkeeping it helps save you experience gives you confidence your records are being done properly and realise taxation duration a whole lot easier if you aren’t sure who to hire check out bench or the largest bookkeeping service in north america and we’d love to do your bibles for you and that’s it from us here at terrace good luck on your entrepreneurial jaunt and glad bookkeeping

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Hello, my name is Reni Vengela usually called Reni. I am a professional writer on several sites, one of which is this blog.

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