When you first started your small business, you were probably excited to interact with your first customers and begin to make a profit. You probably weren’t too excited about learning how to bookkeep, especially if you’ve never been a person who liked math. However, in order to run a small business, it’s important to be at least a little skilled in the art of bookkeeping. While this may be a bit overwhelming if you’re more passionate about selling used airplane models or providing weight-loss advice than you are about numbers, a basic understanding of bookkeeping can revolutionize your business. With the correct bookkeeping tools, you’ll be able to feel more in control of your business and better understand your profitability. Read on to learn more about the basics of bookkeeping for your business. SmarTax, LLC is a top provider of accounting services in Pembroke Pines. Call SmarTax, LLC today for your bookkeeping services!
What Bookkeeping Does
So what exactly is bookkeeping? Basically, it is the process of recording and organizing a business’s financial transactions. A bookkeeper is the person who is responsible for that process. Bookkeeping is the primary way in which business owners are able to know if their business is turning a profit; keeping an eye on your numbers allows you to point out financial challenges early on and address them so that they don’t expand into larger crises. Bookkeeping also helps you find areas of profit expansion- areas which you may not have noticed without clear financial reports you are able to interpret easily. Typically, a bookkeeper records transactions, sends invoices, makes payments, manages accounts, and prepares financial statements. While bookkeeping services and accounting are similar, bookkeeping is the basis for the accounting process while accounting focuses more on analyzing the data which bookkeeping collects.
Accounting Services For You
There aren’t individual bank accounts in the world of bookkeeping- instead, an account consists of a record of all financial transactions of a certain type, such as sales or payroll. There are five basic types of accounts to be aware of:
- Assets- Cash and resources owned by the business
- Liabilities- Obligations and debts owed by the business
- Revenues or income- Money earned by the business, typically through sales
- Expenses or expenditures- The cash that goes out of the business to pay for some item or service
- Equity- The value which remains after liabilities are taken away from assets, and which illustrate the owner’s held interest in the business (such as stock, retained earnings)
Bookkeeping starts out with setting up each necessary account in order to record transactions in the appropriate categories. You may not have the same exact accounts as some other businesses, but many accounts are very common. This is why it’s so important to be informed regarding at least the basics of bookkeeping, even if you end up paying somebody else to do it or you.
Contact Us Today
There are many aspects of running a business, but bookkeeping is a key one. Knowing the basics of bookkeeping will help you be more informed about your business and make it more possible for you to turn a profit in the future. SmarTax, LLC is a top provider of accounting services in the Pembroke Pines area. If you are looking for bookkeeping services, call SmarTax, LLC today!