How To Organize Small Business Accounting In 7 Simple Steps. If you’re just starting your business, you will need to track, record, analyze all transactions in order to know your operations i.e your income, expenses, and overall profit. It is, therefore, crucial to know simple ways to organize your account for your small business.
Are you in the dark about what this entails?. Pay rapt attention as it will be detailedly given in this article.
What Are The Ways To Set Up My Small Business Accounting?
Since the essence of a good business account can’t be overemphasized, there are things you must adhere to step-by-step to make it work. I will give them to you below:
- You must open a business and savings account for transactions and savings, in case of any incidental expenses.
- Then create a recording file for your transactions ranging from finances, financial statements preparation, checks, tax, invoices, purchases order e.t.c.
- Choose your account type, accruals, and cash-basis basis. The first requires a 2- way entry and the latter requires payment of cash before income and expenses will be recorded.
- You must have a trial-balance file so as to help you notice the amount the money spent and received i.e income and expenses. This is needed to track your progress, profit, and losses.
- Have a financial statement showing how financial activities are carried out such as your balance sheet, losses, and profit.
- All you now do is restart your financial accounts so as to begin a new cycle.
- Start transacting to make it active.
5 Tips To Keep Your Small Business Accounting Organized?
Maintaining your account is as important as having it because a mismanaged account will not achieve its purpose. Keep your small business account organized by following these processes.
- You must have a good financial tracking system at work, this will help monitor and balance your financial transactions.
- You can also use accounting software; this is needful if you have a lot of things to attend to or you have multiple businesses.
- You can get a professional accountant in this field to assist you with taxes, business deductions e.t.c.
- Finally, keep your accounting paperwork in a filing manner, whether electronically or manually.
What Are The Books Of Account Requirement For My Small Business?
As a business, a book of account will keep the day-to-day activities of transactions. The books of account are manual, loose-leaf, and computerized. However, you must have some minimum requirements and take into consideration the size of your business and your financial capacity.
They are given thus:
- Through general journal, you can record business transactions using the debit and credit method. It is the book of original entry.
- You can have a summary of all journal entries to know your ending balances through your general ledger. It is the book of final entry.
- Cash receipt journal is used to record cash sales.
- Cash disbursement journals records money spent/expenses.
- Sales journal records the sales given on credit to customers.
- Using the purchase journal, you can record purchases on credit.