Small Business Bookkeeping Basics

Make sure to tackle your books when your mind is fresh and engaged—say, at the start of the day before you open your doors rather than late at night, after you’ve closed up shop. You want to be at your best when you’re looking at figures that explain your business’s profitability and help you chart a course for progress.

• Accounting involves recording, plus, classifying, interpreting, analyzing, reporting, and summarizing financial data.
• If the total debits are more than the total credits, it’s called a debit balance.
• Access all Xero features for 30 days, then decide which plan best suits your business.
• In addition to covering small business topics for Merchant Maverick, he has experience writing about environmental issues, travel, and personal finance.
• Bookkeeping is the recording of a business’s financial transactions with financial implications that need to be recorded.

If not managed properly, spreadsheet tabs may not be linked or up to date. In addition, you can’t integrate spreadsheets with bank statements, credit card reports, or payroll records. And if you need someone to help you manage the books, you may find it challenging to train them in Excel. As your business https://www.wave-accounting.net/ grows, your small transactions also increase. If you’re posting more transactions each month, entering data can make bookkeeping more difficult. If you post business and personal transactions in the same bookkeeping system, you risk the accuracy of your financial statements and tax returns.

The difference between bookkeeping and accounting

It is a financial report that tracks incoming and outgoing cash in your business. It allows you to understand how well your company handles debt and expenses. By summarizing this data, you can see if you are making enough cash to run a sustainable, profitable business. This decision will depend on when your business recognizes its revenue and expenses. Small businesses that sell products need to record and track the flow of their inventory. Performing a weekly inventory review is useful for identifying when more products need to be ordered. Having updated information on stock is also useful for identifying theft and letting employees know when an item is back in stock to avoid missing out on potential sales.

They also take initiative, prioritize and can regularly meet deadlines. Another essential part of being a good bookkeeper is being trustworthy and honest because you’re privy to so much important and confidential information. This Bookkeeper job description template is optimized for posting on online job boards or careers pages. Add your specific bookkeeping responsibilities to attract the most qualified candidates for your company.

Hiring Bookkeeper job description

Liabilities are what the company owes like what they owe to their suppliers, bank and business loans, mortgages, and any other debt on the books. The liability accounts on a balance sheet include both current and long-term liabilities. Current liabilities are usually accounts payable and accruals. Accounts payable are usually what the business owes to its suppliers, credit cards, and bank loans.

If you were working with an in-house or remote bookkeeper, you’d probably be in touch with them to check on your books on a monthly basis. As a DIY-er, you should make a plan to sit down and commit some time on a monthly basis to keeping your books in order.