5 Business Bookkeeping Basics You Should Never Ignore

You’re starting up a new business or becoming a sole trader. This is a great way to gain financial freedom, but you need to make sure all your finances are in order. You’ll be liable for all types of taxes and will need to fill out the right tax forms each year. It’s time to look into the business bookkeeping basics.

Of course, while you know you should get an accountant, you may not have the money for that right now. So you’ll be looking for ways to save money in the short term and here are the top tips you shouldn’t ignore.

Set Up and Manage Your Accounts

You’ll have a business account. This isn’t actually your bank account, but a ledger of sorts. Most of the business bookkeeping is now done through computer programs, but you’ll have five accounts:

• Assets
• Liabilities
• Revenues/income
• Expenses/expenditures
• Equity

Some businesses won’t have everything. Others will find one set of accounts is fuller than another. The accounts break down as:

• Assets: Cash/resources the business owns
• Liabilities: The debts/obligations the businesses owns
• Revenues: Money the business earns
• Expenses: Money the business pays for services/items
• Equity: Remaining value after liabilities are subtracted from the assets

Opt for a Double-Entry System for Business Bookkeeping

Whether your business is big or small, you need to track and record every transaction. A double-entry system is the most secure. While it takes more time than a single-entry system (okay for very small businesses), it’s better to make sure all your figures match up.

The single-tracking system only gives a small snapshot of your business. If you get audited, your auditor will prefer a bigger system that marks credits and debits, and makes sure everything balances.

Use Business Accounting Software

Don’t try to do everything by hand. There’s no point anymore considering all the business accounting software out there. Business bookkeeping by professionals is even done with software!
The software makes for easy reporting. It also helps you see if there are elements that aren’t balancing right.

You don’t need to buy business software. It’s possible to set up a system with an Excel sheet. Make sure you save backups of your accounting work.

Create and Stick to a Schedule

Business bookkeeping is an ongoing task in your business. It’s why many people will hire an accountant instead. You want to focus on other parts of your business.

However, what is important is setting up a schedule. Whether it’s weekly, monthly, or quarterly, you want to get yourself in order to track everything, balance the books, and file everything away. By getting in a regular habit, you’ll be ready for tax time.

Store Your Records Securely

Finally, make sure all your records for your bookkeeping are stored securely. You want to make sure it’s organized, so you can easily check on things for your tax reporting. Having all your records stored will also mean that you can pull them out if you’re audited.

Don’t ignore the basics of business bookkeeping. You’ll find everything goes much smoother from the beginning and you’re ready every time tax season comes around.