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Small Biz Accounting Tips, July 2013
August 09, 2013
|Hello small business owners!
Hope your summer is going well!
...and your small business too!
It's starting to feel more like fall here in the Midwest, though. It's a bit cooler than average, but I'm not complaining!
In this months newsletter we're going to talk about some basic accounting journal entries for cash disbursements and petty cash. Then we'll talk about Accounts Payable.
So let's get started!
Accounting Journal EntriesCash Disbursements
Last month we talked about journal entries for cash receipts, so this month let's explore some of the different types of journal entries you might see concerning cash disbursements.
Hopefully you've started some kind of
Cash Disbursements Journal,
to capture all of your outgoing cash in your small biz.
Let's run over to the office supply store for some printer ink and paper.
That entry would look like this:
Say we pay the local paper when we place an ad for the upcoming week.
A lot of businesses have a bit of cash on hand to use for small purchases and then add to it when it gets low.
In Accounting, we call that a 'petty cash fund'. And when we add to it we call that 'replenishing the petty cash fund'.
Let's look at journal entries for both of these situations.
To set up a petty cash fund you would make a journal entry like this:
Debit: Petty Cash Fund.....50.00
As the month wears on, let's say we've used up $47 of the $50.
To replenish the petty cash fund, we'd make an entry like this:
You would then take the check for $47 and cash it, then add the cash to the fund, whether that be an actual cash box that locks (recommended) or just an envelope in a drawer.
Oh, and remember to keep all the receipts!
Your balance in the Petty Cash Fund account (an asset) will still have a balance of $50 after the above transaction and journal entry.
For more info on petty cash,
Not many small business owners walk around with pockets full of cash, though. Most of us pay our small business bills with checks or credit cards, and we usually get billed by our vendors and suppliers.
This means we get 10 to 30 days to pay the bill.
This is called Accounts Payable, meaning an account (vendor bill) that you have to pay in the future as opposed to paying right on the spot.
Helpful Gadget / Product for your small biz
If you're looking for a better way to record and track your bills due, maybe it's time to look into some kind of accounting software.
You can track and pay your bills by hand, as you read about above, and that works great when you're small. But if you've grown to the point of needing some help, or you need a system you can access from your iPad or laptop on the go, look into QuickBooks.
QuickBooks is the leading small biz accounting software. I've used it for years. The software is made for small biz owners, not accountants, so it's easy to navigate and easy to use.
For Accounts Payable, you just enter each bill into the QuickBooks form. Then every week you pull up a report that tells you what bills are due. You can pay them all or pick and choose. You can also print checks out right there.
There is a little investment of time at the front end - entering your vendors information, but once it's there you're good to go!
They say every business should have a website.
Well, maybe you don't have the money to hire a web designer. Maybe you aren't all that techie (like me) and wouldn't know how. Well, let me tell you about SiteBuildIt.
SiteBuildIt (SBI) is my web hosting company. But it's so much more than web hosting. There's so many plug-ins and extras - at no extra cost - and so much information and instructions on getting traffic and setting up pages - and you don't have to know one lick of HTML. I set this site up using SBI - and they've helped me set up this newsletter, and a blog, and forms and links and everything you see here.
So, if you're thinking about getting your small business online, whether it's just to give prospects a place to find out who you are and where you are before they call you - or whether you'd like to set up a site for some passive income for your family - you owe it to yourself to check out SBI. They have 90 days free service just to check them out.
Well, that's it for this month.
I'll be back next month with more tips and help for your small business bookkeeping.
PS: Please feel free to let your fellow small biz owners know about this newsletter! Send them to my sign up page - the last button on my navigation panel.
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