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How Do I Start Bookkeeping for My Business?


So, you have started a business... It may have started as a way to make a little extra money on the side, or you may have chosen to go all in and pursue the business of your dreams with all the time, money, and energy that entails. Now, your business is growing, and keeping track of your sales and expenses is getting a little more difficult. You are starting to see why it might be important and necessary to keep better track of your financials.


Well, I know the idea of getting started with bookkeeping for your business can be overwhelming, so here is some information and tips that might be useful to you when getting started.


What tools will you need?


You can start tracking the numbers for your business using Excel or Google Sheets. Every transaction (sales, purchases, payments, sales receipts, etc.) needs to be accounted for. There are many free and available-for-purchase bookkeeping spreadsheets online that could be used to get started.


The second option, and my recommended choice, would be to sign up for an accounting software. I use QuickBooks, which is great for small businesses because of its ease of use. It also is one of the most popular accounting softwares, so there are many tutorials, help videos, and other resources out there for people to use. Xero and Zoho Books are other popular options. If you are interested in one of these, here is a link that compares the different software:

If you are interested in my services, QuickBooks Online is the software I will use, and I provide a 30% discount for 12 months on your QuickBooks Online Subscription.


What Should You Be Keeping Track Of?


The IRS requires you to track gross receipts, purchases, expenses, assets, and travel and entertainment. These are the basics and this is where the bookkeeping comes in. To help you track these business transactions, there are 5 main accounts that you will want to use. For the most part, each of your business transactions will fall into one of these accounts:

  1. Assets – includes your cash, property, equipment, and accounts receivable

  2. Liabilities – includes your accounts payable and loans

  3. Equity – includes your contributions and draws

  4. Revenue – includes your sales and cost of goods sold

  5. Expenses – includes insurance expense, depreciation expense, meals on-premise expense, supplies expense, etc.


When you are doing double-entry accounting, every transaction is recorded in at least 2 accounts.


For example, a cash sale of a $20 tin of tea would include a $20 debit to Cash and a $20 credit to Sales. Each account has different debit and credit rules.


This double-entry accounting can take some time to learn, but an accounting software can simplify the process for you.


A Few Tips…


My biggest recommendation to you would be to open a business bank account. This will make your life so much easier when you are trying to track down your business’s transactions and balance your accounts. When you open a business bank account and credit card account, you can connect it directly to your accounting software. This will ensure no transactions are being missed and everything is being accounted for. You will also have a clearer picture of your business’s financial health, and you will be able to see your revenue and expenses more easily. Keep your business and personal finances separate! You will be happy you did.


Secondly, it is so important to stay organized and stay on top of your books. When your record a transaction in a timely fashion, it reduces the guesswork and stress at the end of the year when you are trying to get everything in order for your taxes. It is not only beneficial to stay organized for when tax season comes around, but staying up to date on your numbers can be extremely beneficial for the growth of your business. You will be able to see where your expenses are too high, see who is your best customer, what is your best product, and what is your gross margin When a customer calls in and asks what they owe you, you can give them a quick and accurate answer. The beneficial business decisions that you can make from being organized are endless.


I also recommend that you keep digital copies of EVERYTHING! By everything, I mean receipts, agreements, gross receipts or sales tax filings and payments, invoices, cash register tapes, receipt books, bank statements, and anything else that you receive a paper or digital copy of. No matter how on top of your bookkeeping you are, there will be times when you will need to go back and look at a copy of a document to check your numbers. Being diligent with this type of admin work will save you lots of time in the future when you are trying to track a number down.


My final recommendation to you would be to hire a bookkeeper! Yep, that’s me! There will be nothing better for your business than taking this stress off your shoulders. Without having to worry about keeping track of all your financial transactions, you can focus on the aspects of your business that you love, and that you are an expert at, that made you want to run a business in the first place! How do you want to grow? Where is your business struggling that you have had to neglect due to lack of time? What do you want to spend more time doing? Let me help you, so you can find balance in your business once again!


I really hope this helps give you the confidence you need to start taking charge of your books.


It will take a little bit of time and effort, but you will be so happy that you took the step. Once you start understanding your numbers and making decisions off what you see, you and your business will begin to reap the many many benefits!



Resources used in the research done for this post:

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