How Bookkeeping keep Records for your Small Business
It doesn’t matter if you’re a brand new business owner, or if you have been operating an online shop for many years, it can be overwhelming to learn how to track your revenue and expenses. You are not the only one. Nearly three-quarters of small business owners feel that they don’t have the necessary knowledge to manage their bookkeeping and accounting processes. You must manage your assets, tax returns, credit card chargeback, and many other aspects of your business. If you are just starting out, it can be overwhelming and confusing. It doesn’t have to be.
Do you want to be a professional at bookkeeping? This article will teach you everything you need to know about bookkeeping for small businesses and how you can make it more profitable.
Introduction to Bookkeeping
Bookkeeping is the recording and management of all financial transactions, including purchases and sales. To help companies make informed financial decisions, bookkeepers keep track of all income and costs. An account in business bookkeeping is a record that records all debit and credit transactions of a particular type such as payroll or accounts payable.
There are five types of accounts:-
- Assets – Resources. These are things of value that a company owns as a result of its financial transactions (e.g. inventory, receivables).
- Liabilities. Obligations and debts that a company owes to suppliers, lenders, banks, or other providers (e.g. small business loans and accounts payable).
- Income or revenue. Money that the company earns from selling or providing services.
- Expenses. Money that is withdrawn from the company to pay assets or services (e.g. utilities, Business Insurance, salary).
- Equity. After all, liabilities have been removed (e.g. stock, retained earnings), the remaining value of an owner’s interest in a company.
Start with creating each account to record transactions in the correct category. This is your general ledger. While you may not have the exact same bookkeeping process as another e-commerce store online, there are many accounting methods that can be used depending on your business’s needs.
1. Keep and update financial transaction records
It is a job that involves using numbers. The majority of the work involved basic math and accounting. The details will vary depending on what type of business you have, but they can include tasks such as recording financial transactions and invoicing.
Other finance-related matters will also be taken care of, such as:
- Budget Planning to help the company grow and stay on track.
- Tax bookkeeping for income, payroll, and even small-business tax deductions to properly file with Internal Revenue Service (IRS).
- Get financial statements ready for your stakeholders (balance sheets and income statements, cash flow, and changes in equity).
Bookkeeping requires careful analysis and some legal knowledge. You want to ensure that your books are correct and that deductions are legal in the event of an audit.
2. Keep track of who is spending and what they are doing.
It can be time-consuming to manage financial bookkeeping. Maintaining your general ledger is essential to ensure accuracy in each financial transaction.
You will need to be able to communicate and organize well in order to master your accounting and bookkeeping system. You may be required to collect receipts from employees or manage travel expenses. A system for reimbursements and submissions will ensure that you never miss a transaction and that your records are accurate and up-to-date.
3. Bookkeeping services can be used to improve processes
A good bookkeeping or accounting program should be included in your small-business accounting tools. Small businesses must keep up to date with the latest technology due to virtual bookkeeping and other online bookkeeping services.
You can automate data entry, consolidate data and automate record-keeping with good bookkeeping software or services. This is a great way to increase accuracy and reduce repetitive tasks.
Small business owners can use the best bookkeeping software
There are many tools that can make it easier to do online bookkeeping. These tools will vary depending on your business needs.
- A2X. This app posts Shopify store sales automatically to Xero and QuickBooks. It also reconciles your payments so that you can verify everything is correct. A2X has been trusted by many of the most respected eCommerce accounting firms.
- OneSaaS Integrations. TwoSaaS connects business apps across all areas of accounting, eCommerce fulfillment, billing, invoicing, and email marketing. It is easy to create custom workflows and build a bookkeeping system that grows with your business.
- FreshBooks. This cloud-based bookkeeping software allows you to manage Shopify orders in FreshBooks. It is based on three objects: invoices, items, and payments. It uses Shopify inventory to update financial information and also acts as the source for all inventory management.
- QuickBooks. Shopify integrates with QuickBooks to automatically update your inventory, customers, orders, and shipping information. QuickBooks can be used to post eCommerce order information in batch journal entries, or at a granular level. It also syncs with other eCommerce marketplaces like Etsy, Amazon, and others.
- Bench. Bench provides affordable outsourcing bookkeeping services to your Shopify store. The app can sync directly with your merchant account and bank accounts. A virtual bookkeeping team then balances your monthly books and prepares financial reports.
For small businesses to grow, bookkeeping is essential
It doesn’t matter if you do all the bookkeeping yourself, or if you hire a certified bookkeeper to help you understand how money flows through your company.
Charlie says that it is crucial to have accurate data. He also recommends knowing your current situation, where your revenue is coming from, and where you can cut costs. Bookkeeping for startups is a critical part of your success.
Even if your bookkeeping skills are not extensive, you can now access all financial information and make informed decisions about the future of your business. Even though expert advice and bookkeeping assistance are valuable, you should never lose the fundamental understanding of your numbers.
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