Once you've started your small business, you could probably use some bookkeeping help. I've got what you need here to get you started.
In the 1st section on this website, I show how to set up a set of accounting files, and a system of journals to record and track your receipts and disbursements each month.
In this section, I'm going to show you how to actually navigate thru your day to day bookkeeping as you run your business.
Most small businesses can benefit from having a few dollars sitting around for incidentals. Just make sure you account for the transactions. They're business deductions. At least, they should be. Don't pay personal needs out of your business petty cash fund.
The IRS suggests you have the date, the cost, and the business purpose for each transaction. I suggest you keep each sales receipt, and write on the receipt what the business purpose was and any other participants. I'm thinking business lunches. If you meet a potential customer for lunch, for instance. For other purchases, like cleaning supplies or office needs, if the sales receipt isn't clear - like it says "Mead8x11ppr" - write on the receipt, "office copy paper".
For more details on keeping a petty cash fund, click here.
Once you start selling products or your services, and customers start paying you, you need a way to record and track customer payments. You can make a Cash Receipts Journal in Microsoft Excel (of the Open Office free version) or on paper, whatever works easiest for you. You can record each customer payment in your journal, or if you're a retailer, you can record each days sales.
In your journal you can track sales by category, like product/service, or type of sale - for instance website or store location. Or any other category that will help you later analyze your sales and help you make better management decisions. For instance, which product is selling better than the others? Which sales person is outselling the others? Do I sell better online or in a store? These answers and more can be found by using a Cash Receipts Journal.
Get more detailed help preparing your own journal here.
So, once you start your own small business, you're going to have expenses. You're going to need some bookkeeping help keeping track of who you owe and when these bills are due. I suggest using a Cash Disbursements Journal.
Just like the Cash Receipts Journal, this can be on the computer or on paper. You can easily track your disbursements (rent, utilities, supplies, materials for jobs/projects, etc.) in a Cash Disbursements Journal.
Record each check and ACH transaction, and categorize it into columns representing your different expense accounts. You can have a column for Materials, for Insurance, for Utilities, etc. At the end of the month you just add up the columns and have monthly expense totals.
Get more details on building your own journal here.
As for knowing which bill is due when, see the next topic.
Accounts Payable is an accounting term meaning bills that are due. You'll soon have bills coming in the mail / email weekly, if not daily. It's important, obviously, to pay them on time. How are you going to keep track of these?
You need a filing system that will help you track the due dates so everything gets paid timely. See more details on Accounts Payable here.
Do you manufacture a product? Does your work entail projects - like landscape design or decorating or installing computer systems? If so, you could benefit from using Purchase Orders.
If your business is very small, and you do everything yourself, there's not much to be gained from using purchase orders. But, if you have employees ordering materials, receiving those materials, and paying the bills, you will benefit.
These little forms will make sure you get what you ordered, that what was ordered was authorized, and that the price you're being charged is the price that was quoted.
PO's stop unauthorized purchases, cut down on inventory loss from theft, and keep your costs in line. Find out how here.
All of you who are manufacturers or retailers, do you need bookkeeping help keeping track of all those materials and products you purchase? You need to track inventory items from purchase to use to sale. And you need to assign a cost to each item.
As the products are used and sold, they need to be transferred out of inventory and into an expense account.
This can be done in a computerized accounting system, by identifying items as they're purchased. You can even track items by job number or project number. That way you can compare the actual costs of a job with your quoted estimate.
If you're using a manual accounting system, you can still track your inventory items and costs.
By using the above, you should have a better grasp on recording your sales and expenses. Day to day transactions should be recorded into your journals, and then totaled up at the end of each month. That will give you your monthly sales and expenses. From this information, you can prepare a Profit & Loss Statement.
If you're using a computer system, this report is a click away. In a manual system, it's easy to prepare this statement from your journals. Learn how here.
Return to my home page to navigate to other sections and more bookkeeping help.