As a small business owner, there are some bookkeeping basics you’ll need to understand. If you want a clear vision of your business’ financial health and to understand your cash flow status, you will want to keep efficient bookkeeping records. Here are some of the basics:
Cash – This is the most straightforward of bookkeeping methods as all transactions go through a cash account. Two ledgers will be required – one for receipts and one for disbursements. This is the most basic method for tracking financial activity.
Accounts Receivable – For businesses who sell services or products where payment is not immediately made, a ledger for ‘receivables’ will be required to track payments due from customers. This is essential in order to send out invoices or bills on time.
Accounts Payable – This is a record of all money going out of the business. Accurate record keeping here means payments are made on time, charges are avoided and you don’t end up paying someone twice. For help with Bookkeepers Hereford, go to a site such as https://office-support.co.uk
Inventory – Products equal money and so you’ll want to keep track of all the inventory. A physical count of inventory should be completed against what’s in the books periodically.
Sales – This is a log of everything that the business sells and all the revenue incoming from those sales. Getting this right is vital for understanding where your business is financially.
Loans Payable – If your business has borrowed any money for business purposes, this records the amount of payments and when they are due.