Bookkeeping Tips: 15 Things Every Small Business Needs to Know

Last updated Apr 2, 2024

It’s important to note that not all lenders and investors require certified or audited financial statements. And even if you’re not looking for funding, consider asking an accountant to review your financial statements at least once a year. Generally, if your assets are greater than your liabilities, your business is financially stable. Note that certain companies, such as those in service-based industries, may not have a lot of equity or may have negative equity. However, this needs to be communicated to the suppliers in Melbourne to make sure the relationship is not strained. Sometimes, bookkeepers recommend making payments early to leverage discounts offered by the suppliers for quick payments.

Conversely, less robust methods of bookkeeping will not suffice for large corporations. Unfortunately, bookkeeping is something many small businesses struggle with. They’re not entirely sure how to set up their books or manage them on a regular basis. The good news is, you don’t need to be a Certified Public Accountant (CPA) to keep good books. All you need is a crash course in bookkeeping 101 and the right software on your side.

Excel bookkeeping vs. online bookkeeping

You’ll want to create a contract that outlines details, such as deadlines, rates and expectations so that everyone is on the same page. The skills needed to become a successful bookkeeper are often acquired through working How to Meet Your Bookkeeping Needs in a career in the finance industry or even by balancing your personal budgets. Many bookkeepers hone and develop their expertise over time while others opt to complete seminars, read books or take online classes.

While the journal is not usually checked for balance at the end of the fiscal year, each journal entry affects the ledger.
If you’re ready to take bookkeeping off your plate and delegate this task to someone else, it can be hard to know where to look.
Without reliable data, you may not be able to make the best decisions for your business.
One of the most frequently asked questions about bookkeeping basics is, “What is the purpose of bookkeeping?

That is an incorrect classification of expenditure or receipt between capital or revenue. Such an error may lead to under or overstating of income or assets or liabilities, etc. Accrual basis of accounting is an accounting method that measures the position and performance of your business by identifying the economic events that occur during the course of business.

Cash-based or accrual-based

This means that you can calculate your taxes only when you know total income and total expenses. Double-entry bookkeeping is the practice of recording transactions in at least two accounts, as a debit or credit. When following this method of bookkeeping, the amounts of debits recorded must match the amounts of credits recorded. This more advanced process is ideal for enterprises with accrued expenses. One of the primary tasks of bookkeeping is recording of all the financial transactions on a daily basis.

Purchase transactions, sales transactions, cash inflow, cash outflow, and other types of the transactions must be recorded properly. You cannot skip any of the financial transactions, as it might impact the making of the other accounting books. Every business step requires capital, from transforming an idea into a model to investing in its expansion. As a professional bookkeeper, you would keep track of a company’s financial transactions and record them in the general ledger accounts. It not only helps in maintaining organized and accurate financial records but also plays a vital role in financial planning, compliance with tax laws, and informed decision-making.

Should I do my own bookkeeping?

While there is some overlap between bookkeeping and accounting, several factors distinguish these processes, as we explore in the table below. Find out more on bookkeeping accounting skills, how to earn accounting degrees and bookkeeping certifications, getting jobs, salary expectations, and more. You’ll post three common financial transactions to your accounting system. Our accounting solution and dedicated accountant save you endless hours of trying to find regulations relevant for your business. Our A to Z accounting service is done professionally for only a low investment starting at just $42/month (billed yearly).

This is irrespective of when the cash is received or paid during the course of business.
QuickBooks is an excellent option for novice and seasoned digital bookkeepers alike.
Then they create a second entry to classify the transaction on the appropriate account.
As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution.
A bookkeeper’s job comprises maintaining and balancing financial records, including transactions from coworkers.

This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. If you’re like most modern business owners, odds are you didn’t become one so that you could practice professional-level bookkeeping. Your general ledger should be up to date so that your bookkeeping software is able to provide functionality that you can navigate easily. QuickBooks is an excellent option for novice and seasoned digital bookkeepers alike. By logging and keeping track of all financial transactions, you will have easy access to any financial information you might need.