Business Topics & Grants

Financial-Accounting-10 Bookkeeping Basics You Can’t Ignore

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by George Schaefer, Score.org Certified Mentor & CMStotheMAX

AI Generated & then Augmented

10 Bookkeeping Basics You Can’t Ignore


Keeping the books is an essential part of running a business. It includes tracking money and records of deals. Correct tracking shows how a company is doing financially and ensures that it follows tax rules.

 

Track Every Transaction-Every time your business makes a payment, you must track it. This helps you get the correct cash information. Every exchange shows whether money is coming in or going out. You can keep track of these activities by hand or with accounting tools. You avoid making mistakes or missing notes when you record deals as they happen.

 

In the long run, mistakes in tracking can cost you money. Making it a habit to record deals often will help you stay out of trouble. Check your records occasionally to ensure they match your bank accounts and bills. It will be easier to keep track of transactions if you log them right away.

 

Maintain Separate Business and Personal Accounts-You need to keep your work and personal funds separate. Mixing up the accounts can make it hard to keep track of your business’s finances and difficult to understand when it’s tax time. Having separate accounts helps keep business funds safe from personal spending.

 

It’s easier to see how well your business does when your personal and work funds are kept separate. Setting up a business account also shows clients and suppliers you are serious about your business. Make sure that all business transactions go through the correct account. This will give a more exact idea of how much money was made and lost.

 

Understand Your Cash Flow-Cash flow management is vital for your business to stay alive. It shows how your business gets and spends money. To determine when to cut costs or invest in growth, keep a close eye on your cash flow. Regularly monitor your income and spending.

 

Knowing about cash flow is essential for keeping your business flexible and able to pay its bills. Your business will have trouble if its cash flow is negative for too long. You can use tools to manage your cash flow or hire someone to help you monitor it. To keep your business healthy, look at your cash flow often.

 

Use Double-entry Bookkeeping-The most effective way to track deals is with double-entry tracking. It helps you keep correct records of your money. With this method, each purchase is saved twice, once as a credit and once as a charge. Your books will stay equal with this method. If there is a difference, it means there is a mistake that needs to be fixed.

 

With double-entry banking, you can see exactly how much your business has. It makes it less likely that entries will be missed or made twice. This is how most accounting software works by default. Always double-check records, whether by hand or with software, to ensure they are correct.

 

Keep Financial Statements Updated-You can understand your company’s financial situation better with the help of financial records. Keep them up to date. You can learn about the health of your business from statements like the balance sheet, income statement, and cash flow report. When you make choices, you should always use the most up-to-date information.

 

This helps when you’re making plans to grow or cut costs. You must also have up-to-date accounts when looking for loans or investments. You should plan when to make changes to your financial records and stick to it, whether it’s once a month or three times a year. Having accurate records is very helpful when you file your taxes or go through an audit.

 

Reconcile Your Financial Accounts Regularly-Accounts need to be reconciled to ensure their accuracy. When you reconcile, you look for differences between your records and bank bills. This process helps find mistakes or deals that are supposed to be avoided. It is a good idea to keep up with reconciling your accounts. If you do this once a month, you’ll have a good idea of your finances.

 

When you reconcile, your books stay fair and up-to-date. It’s harder to fix problems the longer you wait to get along. If you use software to keep your books, it usually comes with balancing tools. Fraud and money loss can be avoided by doing regular accounting.

 

Track Accounts Receivable and Payable-Keeping track of your accounts due (AP) and accounts receivable (AR) is essential for your cash flow. Through AP, you owe money to other people and your business. Late payments from both sides can hurt your business’s cash flow. Check your AR often to ensure your customers are paying on time and that any short remits are handled promptly.

 

A strong system of tracking claims and returns to vendor is important.

 

Follow up right away on AP past-due bills. Monitor your AP closely to avoid late fees and bad relationships with vendors. Many bookkeeping tools let you set alerts for when things are due. Monitoring AR and AP ensures that cash flows smoothly and that business relationships stay strong.

 

Stay on Top of Tax Obligations-It is essential to know what your tax responsibilities are. Tax rules are different for each type of business. If you don’t meet dates or pay your taxes, you could face fines or legal problems. You will not have to stress at the last minute if you remember your tax dates.

 

You should always have money set aside for taxes. This keeps people from running out of money when taxes are due. You can hire a professional or use tax tools to stay in line. For tax purposes, you must always keep correct records of your money. Look over the tax rules that apply to your business and your location.

 

Paying taxes late has large penalties. Non-payment of certain taxes may severe financial consequences for corporate officers and others who have check signing authority.

Backup Financial Records-For the safety of your business, you must keep copies of your financial records and certain records including financial statement, board minutes are required to be stored perpetually, so having an extra copy offsite is highly recommended in case of destruction of the office. Losing your private information can be good. Make it a habit to save copies of your files often. Cloud storage is a secure and straightforward way to store your files. You can also back up your files on portable hard drives.

 

Backing up should be done every day on multiple hard drives on different computers or external hard drives.

Also, you should check your backup system often to ensure it works. Backups help you get back on your feet quickly after an accident, a technology glitch, or theft. You could lose years of financial information if you don’t make backups.

 

Leverage Bookkeeping Software-Software for keeping books can make managing your business’s money easier. A lot of companies use tools to do their paperwork for them. The software cuts down on mistakes made by people and saves time. It also gives you real-time information about your money situation. You can keep track of your income, spending, and other essential details with popular tools like QuickBooks, Freshbooks, TurboCash(basic is free) or Xero.

 

Pick software that works with your company’s size and wants. It would help if you learned how to use it correctly to get the most out of it. It can also make records and work with other money-related programs. Keeping track of money will be easier and more accurate if you use financial tools.

 

Conclusion

 

For a business to succeed, its books must be kept correctly. Focusing on these basic bookkeeping skills will help you get more accurate financial details and keep your business stable. Ensure your financial records are always up-to-date, and use the right tools to make tracking easier. If you follow these rules, your business will run efficiently and avoid money problems.

 

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SCORE Resources

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Pros and Cons of Forming a Series LLC for Real Estate Invest

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This is not intended as legal advice; for more information


For more information, email George Schaefer at or https://tinyurl.com/SCOREIE

All rights reserved but permission to use this can be requested Use at cmstothemax.com

 

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