Accounting scares a lot of people, so much that they just avoid it. But accounting really doesn't have to be scary if you just know the basics. For anyone that is running a business, I highly recommend taking a beginner accounting class somewhere, or one geared towards small business. There are some things that it is helpful to know.
First of all, you need to record transactions. You don't need big fancy software to keep track of your accounting; any spreadsheet program will fit your needs just fine. You just need to be able to keep track of numbers in a column, and add them up. If you prefer paper, go out and find a columnar accounting book, or you could even use a notebook and draw lines.
Each column should be labeled for various items. Columns would have various headings like cash, credit card, sales, purchases, shipping, and whatever else you may need. You can always add more columns later as your business gets bigger (this is why a spreadsheet is easier).
I recommend the double entry system, so that each line zero's out. For instance, you receive cash from a party; you would increase cash and decrease sales, shipping, and taxes. The line should equal 0. You can easily set your spreadsheet up to calculate it. Then, to enter the purchase of the product from your company, you would decrease cash, and increase purchases, shipping, taxes. This is where an accounting class comes in, it will help this make sense.
One of the disadvantages to this system is that it cannot print off a report when it comes to tax time, whereas accounting software can help you with that. But, if you keep your books current, you can easily pull the numbers you need for your taxes.
You should also be comparing your credit card and your bank balance to this file occasionally. If the two don't match, you need to figure out why and adjust as needed. Bank fees and interest are two things that can commonly cause balance issues.
These are some very basic accounting principles. An accounting class will explain these in more detail and help you understand them better.
First of all, you need to record transactions. You don't need big fancy software to keep track of your accounting; any spreadsheet program will fit your needs just fine. You just need to be able to keep track of numbers in a column, and add them up. If you prefer paper, go out and find a columnar accounting book, or you could even use a notebook and draw lines.
Each column should be labeled for various items. Columns would have various headings like cash, credit card, sales, purchases, shipping, and whatever else you may need. You can always add more columns later as your business gets bigger (this is why a spreadsheet is easier).
I recommend the double entry system, so that each line zero's out. For instance, you receive cash from a party; you would increase cash and decrease sales, shipping, and taxes. The line should equal 0. You can easily set your spreadsheet up to calculate it. Then, to enter the purchase of the product from your company, you would decrease cash, and increase purchases, shipping, taxes. This is where an accounting class comes in, it will help this make sense.
One of the disadvantages to this system is that it cannot print off a report when it comes to tax time, whereas accounting software can help you with that. But, if you keep your books current, you can easily pull the numbers you need for your taxes.
You should also be comparing your credit card and your bank balance to this file occasionally. If the two don't match, you need to figure out why and adjust as needed. Bank fees and interest are two things that can commonly cause balance issues.
These are some very basic accounting principles. An accounting class will explain these in more detail and help you understand them better.
Sharon Katzman is a Manager with Gold Canyon Candles. Through her business, she is able to help women to make an income and feel empowered. In her downtime, she enjoys crafting, reading, harassing her cats, and being lazy. You can find out more about Sharon by visiting her blog at http://www.thescentsationals.com Article Source: http://EzineArticles.com/?expert=Sharon_K |
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