Even though small businesses need to keep their records accurate, they may not have the money to hire a bookkeeper. Fortunately, a few simple steps can be taken to get started with bookkeeping.
Bookkeeping Defined
Bookkeeping is the process of keeping track of your financial transactions. It involves recording all of the details of a business’s activities in terms of income and expenditures. This is a part of the more extensive accounting process.
This process is primarily used to provide an accurate and timely financial report to accountants so they can use it to communicate a company’s financial results to potential investors.
Spreadsheet Option
A spreadsheet is the best choice if you use a single-entry bookkeeping method. This method is ideal for small businesses that are sole proprietors or those that have limited liability companies.
A spreadsheet can also track all the payments and expenses that come into and out of your business’s bank account and credit card. A running total will allow you to see how much money you’re making and how much you’re spending. This record of income and expenses will be enough for your accountant to prepare a financial report for your company.
Software Option
Many small business owners, especially those who are sole proprietors or those with limited liability companies, may find it helpful to use accounting software to keep track of their financial transactions. Various free programs can provide multiple functions, such as tax management and invoice.
After you’ve found compatible software, you can connect it to your company’s bank account to track all the money that flows into and out of your account. Accounting software can help reduce errors and provide a more accurate record of your financial transactions. It can also help you integrate various parts of your business, such as banking and tax management.
Conclusion
Before starting your business, ensure you have the proper bookkeeping software installed. One of the best ways to start is to establish a separate business account for your company. This will allow you to track all the transactions that come into and out of your company.