30

Apr 2014

Category: Bookkeeping
Written by Super User
1013

If you are starting your own business, and want to know what documents to keep, how to file them, how to store them, what to do, how to keep on top of the paperwork... read on!

 

1. Understand the difference between bookkeeping and accounting. Accountants are trained qualified professionals who analyze accounts and write reports.

2. Define bookkeeping - Bookkeeping is not just filing all documents (such as invoices, bills, bank statements, Agreement forms, etc) together but it is about organizing into the specific categories like Assets, Liabilities, Capital, Expenses, Income, Drawings; with completeness. Completeness meaning having complete set of documents, for instance having all the cheque numbers in order with no missing cheques.

3. Understand the terms used. Here is the "accounting equation": Assets = Liabilities + Owner's Equity. Search on the Internet for Free accounting and bookkeeping tutorials, or for example check here: DWM Bean Counter

4. Sort all transactions down into: Income and Expenses.

5. Use software to help if you want. If you do use software, get appropriate software and know how to use it.

6. Keep books in one or the other single-entry bookkeeping which is similar to just categorizing every expense and income (This may be based upon doing all business income and pay-outs through a company or corporate checkbook/checking account, all separate from proprietor's or officers' personal expenses.). Or as, double-entry bookkeeping which has two places for each record so that totaling both debits and credits (adding or subtracting) to assets or to liabilities accounts. With various kinds of double entry transactions used as a check/balance of the accuracy of the books, for example separate all transactions by:

7. Keep a record of each category for incomes and expenses from day one so sort and total:

8. Keep all items in date order in a:

9. Someone has to determine profit or loss by comparing total income and expenses including some accounts which are for tax accounting.


Credit : http://www.wikihow.com/