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Bookkeeping is the main part of a business finances. When you do bookkeeping it is not done without basic Bookkeeping practice. With the help of bookkeeping you can store every record of your financial transactions, which can help make better decisions for your business to grow fast.
If you are not ready to do your own business bookkeeping and search for a guide that can help you. By understanding basic principles of bookkeeping in this guide we will provide you with a basic understanding of the bookkeeping process, and to download QuickBooks desktop.
Key Takeaways
- Accurately recording of all financial activity and business expenses is possible by the bookkeeping.
- Bookkeeping helps to track your small business finances and gives you an insight report.
- QuickBooks is the best accounting software for small businesses.
- It is helpful to make financial decisions for your business, and also helpful to make a budget for a project.
What is Bookkeeping?
Bookkeeping is a practice for regularly updating the financial transactions of a small business. A bookkeeper professional takes all the financial receipts and invoices of your business transactions to prepare you for tax season and other financial requirements.
Bookkeeping is totally different from accounting. Bookkeeping provides overall data and reports of every transaction and accounting is a way to check the numbers of this data. In simple words bookkeeping is the first step to store data of your financial transactions and accounting is the second step to check what this data says.
How To Do Bookkeeping of Your Small Business?
Here are some steps to start a small business bookkeeping:
Open a Business Account at a Bank
When you set up bookkeeping for your small business, you need a business bank account that helps to make your personal and business transactions separate.
Choose an Accounting Method
When you open a bank account next step is selecting the method of bookkeeping. There are two methods to do bookkeeping the first is cash accounting and the second is accrual accounting. If you are a small business owner you can choose cash accounting. When your business has a big inventory and its accounts are payable and receivable you can choose accrual accounting.
Record Your Financial Transactions
Record your sales, expenses and payments for effective bookkeeping. When you record these transactions, it is necessary to record them accurately. Because you can record them accurately, it is simple to understand.
Use Accounting Software
When you have selected a bookkeeping system, you need software to record these transactions, such as Microsoft Excel and a spreadsheet.
Commonly, entrepreneurs use accounting software that can store this data automatically from their business bank account. QuickBooks is a widely used software which are stream line your workflow, generates reports automatically.
Can You Do Your Own Small Business Bookkeeping?
Yes you can use accounting software to handle your own business bookkeeping. Many small business owner do their own bookkeeping to save money and stay updated with their finances. Here are some important points that help to do your own bookkeeping:
- Understand the basic terms like income, expenses, liabilities, and equity.
- Choose an account method which are cash and accrual accounting.
- By using an accounting tool like QuickBooks Online and QuickBooks Desktop.
- Maintain a clear separation between your personal finances and business finances.
- Track your business income and expenses regularly.
- Understanding the tax basics.
When Do You Need to Hire a Bookkeeper?
- If your books become too complex to understand.
- If your business grows rapidly.
- If you can face too many tax and legal questions.
- If your books have errors.
Final Thaughts
You can manage your own bookkeeping with the right tool and approach. However, when your business finances are complex and your business grows rapidly, you want a professional bookkeeper who can help you understand your finances and also assist in making informed decisions for investment planning.
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