10 Important Things to Know About Business Bookkeeping

Start-up entrepreneurs, as well as business owners, are experts in producing great products and services, forming productive partnerships, and winning over consumers. But many of them would probably hit the panic button when it comes to basic business bookkeeping.

Business bookkeeping can be a tedious, often loathing task. Without proper training, having to operate which accounting methods to use, managing cash flow, or even understanding the key accounting parameters that can set your business up for success is challenging. In fact, one of the main reasons why businesses fail is "bad accounting." You are blindly running your enterprise without proper business bookkeeping or accounting.

‘Do I Really Need A Business Bookkeeper?’

You need to know everything about your business’ affairs but at the same time, you should be able to focus on core business needs. Although you may not need — or want — an accountant, you may at least consider a bookkeeper to assist with the different financial aspects of your business.

Some reasons why you need a business bookkeeper:

• Prepare financial reports

• Compile invoices and receipts

• Correct tax forms and filings

• Income statement preparation

• Cash flow statement

• Maintain cash flow

• Ensuring obligations are paid on time

Hiring a business bookkeeper makes a solid business decision. You save on time, money, and effort so you can bring your profits to the next level.

Business Bookkeeping Accounts You Need To Know

A detailed understanding of your finances empowers company owners to make informed choices and reduces the risk of mismanaging your funds. Besides, you are required by law to maintain correct books and records; in doing so, you will be spared from unwanted complications later on.

Here are a few business bookkeeping accounts that you need to be acquainted with:

1. Cash Account. All your financial transactions go through the cash account, which is so crucial that bookkeepers often use two journals to track the activity, cash receipts, and cash disbursements.

2. Sales Account. A sales account contains all sales transaction records including cash and credit sales.

3. Inventory. The term for goods available for sale and raw materials used in the manufacture of goods for sale.

4. Accounts Payable. These are products you purchased on credit that needs to be paid back in a short time.

5. Accounts Receivable. Refers to the company's outstanding invoices or the cash that clients owe the business.

6. Loans Payable. This is the money that has been loaned to the business and that it still owes.

7. Owner’s Equity. Owner's equity, also referred to as net assets, is the owners ' claim to corporate assets after all the debts have been paid off.

8. Payroll Expenses. Payroll expenses are the amount of wages and salaries paid to employees in exchange for services they provide to a company.

9. Retained Earnings. Retained earnings are a company's earnings to date, less any dividends or other distributions paid to investors.

10. Purchase Account. A ledger account in which all transactions of inventory are recorded; usually used with the standard method of inventory.

There are many, many things to think about and consider. Unless you have the time to become a business bookkeeper yourself, you really should be on the lookout for a reliable and trusted bookkeeping service. Let us help keep your finances in order. Contact Carolina Money Minders Today!