Small Business Book Keeping Basics Tips

If you are already up to speed with the basics, but in need of some tips to help you, here are a few tips to keep your books up to date:

• Post all your bookkeeping transactions on a regular basis - 'little and often' is a lot easier than batching everything up. It will save you both time and money - especially at the year end.

• Post all your expenses, however little they may seem. Each one will affect your profit and how much tax you pay.

• Keep it simple - there are lots of tools available to help you. Simple excel spreadsheets and accounts software now make keeping your records simple and give you all the management information you need at the touch of a button. Find a system that works for you and stick with it.

• Reconcile your bank - this ensures all your sales and purchase transactions have been posted.

• Reconcile your petty cash - if you keep petty cash it is so easy to forget small amounts that you have spent.

• If using double entry bookkeeping - ensure that if you make an entry on one account you will need to make another entry on a second account. One example of this is if you receive a payment you will need to increase your bank and decrease you accounts receivable (customers).

Step 1
Create a filing system. This is fundamental to accounting. Having a filing system in place increases your organisation and helps to prioritise your spending. Dedicate a filing cabinet or desk drawer to accounts payable and another to accounts receivable. Place each customer and suppliers documents in separate files and then alphabetize each file. Keep every receipt and file it accordingly.

Step 2
Learn the terminology. Balance sheets, assets, liabilities, credits, debits, accounts receivable (debtors) and accounts payable (creditors) are common accounting terms, but what do they mean? Balance sheet is defined as a list of assets and liabilities. Accounts receivable are bills your customers owe your business for your services. Accounts payable are bills your business owes to your suppliers. Assets are anything of value, such as equipment, fixtures, or paid stock on-hand, and liabilities consist of loans, lines of credit and inventory on credit terms.

Step 3
Get accounting software. Accounting software requires some set up, such as inputting your business information, such as loans and bank accounts, along with supplier information and customer information. Each time you receive a bill or send an invoice, enter it into your accounting software. Make that a permanent practice.
Sage, a popular small business accounting program, offers several versions tailored for different-sized businesses

Step 4
Have an accountant double-check your work. Have an accountant review your account ledger to ensure that you have properly entered all the information.