You’re in charge of making sure your books are in order, and yet if you’re like most small business owners, your “bookkeeping practices” are almost non-existent – and the only place you keep track of your company’s spending and revenue is your bank account.
The Importance of Quality Bookkeeping
One of the most unfortunate reasons that small businesses struggle is from miscalculating expenses and taxes.
- Some companies spend money they do not really have.
- Some companies miss tax payments.
- Some companies lose out on tax refunds.
No matter how strong your products and services, accurate accounting can make or break your business. The following are some of the most important tips for small business owners to keep in mind as they deal with the ins and outs of bookkeeping.
How to Start
The best place to start your bookkeeping is with what’s known as “cash basis accounting.” This is a very basic, very simple recording practice – cash in, cash out. Record when you get paid for a sale. Record when you spend. Record it on the day it happens, when it happens. Most businesses use this type of accounting method.
What to Record
“Everything” may be too complicated an answer, but ideally, the more in-depth your records, the better. It is very important to keep track of all incoming and outgoing payments.
Incoming:
- What you sold
- Who you sold it to
- How much money/revenue you collected
- When you received the money
- How much sales tax you collected (if applicable)
In most cases, what you will record is the transaction you made with the customer. These are the incoming payments.
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