Bookkeeping Basics For New Businesses

by Joy Phelan

Starting a new business means you need to know some bookkeeping basics. Budget constraints may mean that you cannot hire an accountant and have to do it all yourself so these tips should come in handy to help manage your business money.

Bookkeeping Basics For New BusinessesWhen dealing with bookkeeping basics, it all comes down to record-keeping activities. Some essential points of these activities are as follows:

  • Document Preparation: You will need to prepare source documents for all operations that are needed to run the business. These operations are concerning buying, selling, collections, payments, transfers, invoices, credit card memos, etc. You can do this with a series of excel spreadsheets or use a software program like QuickBooks.
  • Journal entries and ledger accounts: This is a chronological record of all the financial transactions for your business.
  • Accounts listing: This is where you will keep a record of the information about all accounts and also adjust the balance.
  • Closing the books: It is the final task in bookkeeping. This is when all activities are closed and summarized, generally on a monthly basis.

Most business use one of these two basic accounting methods: Cash system or accrual system. A cash system is the simpler one, but not necessarily the best system for every business entity. The transaction is recorded when the income is received and the expense is recorded when you spend the money. While in the accrual system, income and expenses are recorded as they happen and it does not matter if the money has been physically received or not. Which one is the best? Good bookkeeping basics will provide essential information that will help you to run your business financing smoothly. It depends on the choice you make and the type business you own.

If you are unfamiliar with accounting or bookkeeping, it might be a good idea to hire a bookkeeping service to handle your transaction records. For most small business owners, having an accountant on staff is cost prohibitive. A bookkeeper can prepare all the records for your business for a much more affordable cost, leaving you to do what you do best, run your business!

Call us today for a FREE half hour bookkeeping consult to find out more great bookkeeping tips for new businesses! Phoenix Business Services LLC 303-376-6305

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