Accounting knowledge and basic bookkeeping skills is essential for small business owners. See bookkeeping tips and accounting lessons below…
Basic Bookkeeping Tips
Decide if a single entry or double entry bookkeeping system would be best for your business.
In making that desicion, keep in mind, a small sole proprietorship or home-based business may not require a double entry system for recording business transactions.
However, if you have quite a few accounts receivable (money owed to your business by your customers) or accounts payable (money owed by your business), you may want to consider utilizing a double entry bookkeeping system.
Many small business owners will not start right out with a double entry bookkeeping system.
It is easier for them to use a single entry method which is kind of like your check register. You just add the money coming in and subtract the money going out and keep a running balance.
Most medium and large businesses use a double entry system which tracks their income and expense AND their assets and liabilities.
Double entry bookkeeping is required for all businesses that are required to produce a statement of its assets and liabilities (a balance sheet).
Take for example the purchase of a laptop. In a single entry system, you would simply subtract the purchase price from your running total.
In a double entry system, you would debit your asset account and credit either cash or accounts payable…depending on how you paid for it. See why a double entry system is best for tracking assets and liabilities?
See this page for more on the difference between double entry and single entry basic bookkeeping.
See this page for 5 basic bookkeeping tips that will make your small business bookkeeping more efficient and simpler.
See the accounting lessons below for more accounting and basic bookkeeping tips…
Lesson 7: Your small business’s break-even point is the point where your total revenue received equals your total costs associated with the sale of your product or service…
Lesson 13: Accounting for sale discounts returns is not too difficult if you understand the basic accounting concepts behind the journal entries involved on paper or behind the scenes in accounting software.