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Small Biz Accounting Tips, Sept 2014
September 17, 2014
Welcome to your September newsletter on Small Biz Accounting Tips!
Here in the Midwest we've had a somewhat cool summer. Not that I'm complaining - I love it! Hope you've had a great summer wherever you are.
This month we're going to talk about cash receipts.
Cash Receipts can be other things besides sales, like interest income, scrap income, or an owner contribution, for example. But most of your cash receipts will be from sales.
So let's get started!
Cash ReceiptsWhen you receive cash, you increase your cash balance. This is an increase in an asset, and will be a debit entry.
Since we use a double-entry accounting system, you will need a credit entry to offset the debit of cash received. This credit may be your Sales account, or maybe Interest Earned (also a revenue account), or even Owner's Equity (an equity account).
Cash receipts should be entered in a Journal (a book of original entry). A Journal can be on paper or on the computer, and should track each receipt of cash for your business.
A good Cash Receipts Journal will also track customer invoices and payments, sales by product or service category, or anything else you choose to track.
Journal Entries for Cash ReceiptsWhat kind of Journal Entries would you make for cash receipts?
Let's go thru some examples for a wedding caterer.
Suppose a customer orders a catered dinner for 50 people, and pays half now, with the remainder to be paid the day of the wedding.
And this is to record the income finally recognized:
Another kind of cash receipt is interest that you earn in a savings or checking account.
And another kind of cash receipt is owner contributions. Say in going over your business checking account, you realize you're getting short on funds, so you deposit $500 of your own money into the checking account.
If you're a Sole Proprietor, you would record this entry:
But if you're a corporation, you would record this transaction as a loan to the company, like this:
Starting a Cash Receipts JournalIf you don't have an accounting system except for your checking account, I would suggest you at least set up and use a Cash Receipts Journal.
This journal is easy to make and easy to use, and it will help you track your business income, and know who owes you money.
Pros and Cons of taking credit cards.If you have an online business, you may already be taking credit cards. I got my hair cut the other day and she was using a square plugged into her smartphone to take my credit card.
If you aren't taking credit cards yet, you may want to check out National Bankcard,
If you're thinking about using credit cards in your small business, take a look at National Bankcard, they offer Credit Card Processing for Less at Only 0.25% AND Free Credit Card Terminal
If you're already taking credit cards, but wonder if you're getting as good a deal as you could, call 1-877-503-0682 today for a free statement analysis. It's worth a call!
QuickBooks is having a sale.
QuickBooks is a full accounting software system, and it's the #1 small business accounting software package on the market. I use it, so I know it has a lot of great qualities. You can invoice customers, pay bills, pay your employees, track your jobs or projects, and prepare all manner of reports. So if your business has outgrown your manual system, check it out.
A New Option for Small Business Loans
You hear all the time how hard it is to get a small business loan. Banks aren't all that fond of loaning to small businesses, unless you've got great credit and several years of business behind you.
Well, there's a new option. I found it for a personal loan, and they're expanding into small business loans, so I thought I'd pass this on.
If you're looking to buy some new equipment or expand payroll, or whatever, look into Lending Club, for affordable, simple business loans up to $100,000.
To qualify, you need to have been in business at least 2 years, have annual sales of at least $75,000, and have some business credit (a credit card or some vendor credit). The 100% owner will have to give a personal guarantee. If there are more than 1 owner, only the largest owner (>20%) will have to.
How does it work?
You fill out an online application with info about your business. If you qualify, you'll get notified of the rate. They'll verify your business financial info, and make the decision.
As I said, I'm using them personally, and it was a quick, easy process. Try it out!
Well, that's it for this months newsletter.
I'll be back next month with more news and tips to help you with 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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