How To Accounting For A Small Business (Complete With Pictures)

(doylc.com) How to Do Bookkeeping for a Small Business - Bookkeeping is the record of your day-to-day business transactions.You must record both money spent and money received. Since documentation is key, you need to get organized. Capture receipts, bills, and canceled checks. Be extra careful with your petty cash and remember to reconcile your accounts at least once a month.

• How to set up accounts payable

Store proof of business expenses. Liabilities are the amount of money that you owe to other people for business expenses. If you purchase inventory or consumables, you must collect proof of expenditure. You will also need this information later at tax time. Save the following:

- Bills

- Receipts

- Bank statements

- Credit card statements

- Proof of payment

- All other documentary evidence

Set up a spreadsheet or ledger. You need to create an electronic spreadsheet or ledger on a piece of paper. If you don't want to do this yourself, you can buy accounting software that simplifies bookkeeping.

Consider switching to an automated system if you receive more than two bills a day or your expenses are increasing rapidly.

Create columns for necessary information. You will include the following information in your spreadsheet or ledger, so create a column for each:

- Name of Supplier

- Account number

- Type of expenses (e.g. office supplies, professional services, etc.)

- Date you received the invoice

- Amount you owe

Post information daily. It's important not to overlook the liabilities and forget to include them in your spreadsheet. Make a habit of posting information every day.

If you have few expenses, you may only want to post weekly or monthly, but it's important that you remember to develop a routine.

Pay your bills on time. Remember to pay bills frequently - weekly is ideal. Don't wait until the due date. Instead, give yourself a few days before the deadline.

Paying invoices early is a great way to maintain effective relationships with your suppliers.

However, if you have been hired by a company as an accountant, getting paid on time is a necessity to keep your job.

• How to set up accounts receivable

Create an invoice template. You want your bill to be clear so customers pay as quickly as possible. Add the following information to your invoice:

- Your business contact details

- Your company logo (if applicable)

- Clear terms of payment, e.g. B. "Payment within 30 days of invoice date"

- Details of the specifics of your service

- Working hours

the name on which a check should be made out (especially important if you are operating under a fictitious company name)

Keep receipts of payments and other documents. Just as you document your expenses, you also document your demands. Record the following and make electronic copies whenever possible:

- Bills

- Canceled checks

- Other proof of payment

Create a spreadsheet or ledger. You need something to enter your customer information. Select a table or ledger. Also consider using software. You can use the same software for accounts receivable that you use for accounts payable.

If you receive 5-10 invoices a week, you should consider automating the system.

Include columns for customer information. Set up columns for the following information in your spreadsheet or ledger:

- Customer Name

- Date of invoice

- Bill number

- Amount owed

- Due date

- Amount overdue

- Date of receipt of payment

Publish information in your books regularly. Get in the habit of keeping track of the amounts your customers owe you. Depending on the size of your company, you should post receivables regularly. The key is to establish a consistent habit so you don't forget anything.

If you receive multiple invoices per day, daily publication is a good idea.

However, if you only have a few large bills per month, you may want to post monthly or weekly.

However, if you are posting accounts payable on a daily basis, make it a habit to check accounts receivable at the same time.

Track late payments. An accountant also needs to track down customers who haven't paid on time.<> They need to send the customer appropriate letters telling them their bill is due.

If you find that customers aren't paying the business, you should talk to the owner about giving customers more ways to pay. For example, the company might accept credit cards.

• How to documentation of the petty cash

Establish the starting balance. It's easy to lose track of where your petty cash went if you don't keep accurate records. Accordingly, start with an initial balance sheet. Make it small enough that your employees aren't tempted to steal from it, but big enough to cover reasonable expenses.

Most small businesses can get by with $50-200 in petty cash.

ask for receipts. Keep careful records of what postage money is spent on. Require your employees to provide receipts for all purchases made with petty cash. Have a binder where you keep receipts and get in the habit of organizing receipts on a weekly basis.

Make a log. You should also keep a log along with your receipts. You will need the log as there is not a receipt for every purchase. Record in the log the amount withdrawn from petty cash and what it was spent on. Enter the information immediately.

For example, if you pulled out $20 to buy new pens for the office, you should enter the information as soon as you withdraw the money from petty cash. If you have money left over, make a note that you are returning money to petty cash.

Top up by writing a check to yourself. This is a good way to document money transfers. You can keep a copy of the canceled check showing which account you sent money from. Don't just take cash out of your own wallet and throw it in petty cash.

Enter petty cash information accurately on your balance sheet. Think of petty cash as an asset in your financial statements. Don't neglect to record it accurately. While the amounts may seem small, for a small business, they can add up quickly.

• How to reconciliation of accounts

Keep books for all financial accounts. You may have multiple commercial bank accounts. For example, small businesses typically have a checking account to pay bills and a savings account to save money to pay self-employed tax. You should also create a ledger or spreadsheet for each of your main accounts.

Keeping this ledger allows you to monitor the current status of your business. You don't have to wait for the monthly statement to see if your business is failing or prospering.

Bring your books in line. You must ensure that your monthly expense record matches that which appears in your bank records. This means analyzing your bank statement and accounts to ensure the same transactions appear on all of them.

Reconciliation is a good way to spot mistakes - yours or the bank's. If the bank makes a mistake, you can contact them. Share any documentation you have (receipts, canceled checks).

Voting can also help you uncover fraudulent activity. For example, an employee might have withdrawn money from the checking account without telling you.

Carry out reconciliation monthly. If you wait too long, it will be harder to reconcile. Also, you will not spot fraudulent transactions in time.

Meet the accountant. You may need to meet with the company's accountant once a month to go through the books. The accountant can identify unclear or inaccurate records and you can talk about them.