With almost 582 million entrepreneurs worldwide, there is almost an infinite amount of ways to do bookkeeping. Thankfully we have broken down 5 bookkeeping basics for entrepreneurs, so that you can find the best way to manage your business’s finances.
Decide on a Method
There are a couple of standard methods of bookkeeping, one of which is the single entry method, where every transaction gets input only once into the records. While most people start out using the single entry method, the other method is the double entry method, where you record the debit and the credit of each transaction.
Historians love bookkeeping records, because the bookkeeper knows they need to keep every little thing recorded. You need to make a record of every transaction; even something as small as a pack of pens must go on the ledger. This way you can better track your expenses and income while having a detailed trail, come tax time.
Make A Schedule
Do not just say you will record your transactions when you have the time, as you may never actually have the time and then will be swamped with a backlog when you need to figure out your taxes. Set a schedule, weekly, bi-weekly, or monthly so that you are not left wondering about a purchase. When you schedule a time to record transactions, make sure you feel refreshed so that your mind is ready for all those numbers.
Balance the books
Part of your scheduled recording time can also be when you balance the books. Keeping on top of this means that you will know if you are missing a payment or if there are unallocated funds in your account (meaning someone paid you and is waiting on their product). You want your debits and credits to match, and if they do not then you need to go hunting to find out what happened.
Ask for advice
Hiring a bookkeeper can be too expensive for many entrepreneurs as they start out. However, that should not stop you from talking to bookkeepers and asking them for some advice on how to set up a bookkeeping software or system. By seeking advice you will also be strengthening relationships with that person, so they may want to give you a better rate once you are able to hire them.
Managing your business’ finances efficiently might seem intimidating at first, but by following these 5 steps, bookkeeping can become a more comfortable and simple process. For more essential advice and tips on bookkeeping for entrepreneurs, be sure to consult Cassmer Ward’s accounting book, “How Much Does It Cost To Make A Donut.”