In this module, you’ll be introduced to the role of a bookkeeper and gain an understanding of how to use the accounting equation and double-entry accounting. You may be hoping for the best and have a few college courses in your back pocket. Even with these tools, you may not have the expertise you need to handle the responsibilities of a bookkeeper. Keeping up with the records in your small business might be a task you are willing and able to tackle yourself.
Choose an entry system
The double-entry system of bookkeeping is common in accounting software programs like QuickBooks. With this method, bookkeepers record transactions under expense or income. Then they create a second entry to classify the transaction on the appropriate account. Typically, single entry bookkeeping is suitable for keeping track of cash, taxable income, and tax deductible expenses.
To make it even easier, bookkeepers often group transactions into categories. Business transactions can be recorded by hand in a journal or an Excel spreadsheet. To make things easier, many companies opt to use bookkeeping software to keep track of their financial history. A bookkeeping course can teach you the basic knowledge you’ll need to prepare financial reports, organize data using tools like Microsoft Excel, or understand how to balance books. While any competent employee can handle bookkeeping, accounting is typically handled by a licensed professional.
Advance your career with an online degree
Managing transactions is a big part of any daily bookkeeping routine. It includes importing and categorizing transactions properly, reconciling these transactions and making sure they’re recorded according to your entry system and accounting method. Some accounting software products automate bookkeeping tasks, like transaction categorization, but it’s still important to understand what’s happening behind the scenes. It all begins with getting your accounting software set up correctly. Online bookkeeping services might be the exact solution you need to save both time and money.
How to do bookkeeping for small businesses: A step-by-step guide
Two of the most common are single-entry bookkeeping and double-entry bookkeeping. There are dozens and dozens of bookkeeping options available and the choices may seem overwhelming. We’ve analyzed and rated the best online bookkeeping services to help you make the best decision when choosing the right one. Whether you do the bookkeeping yourself or hire someone to do it, certain elements are fundamental to properly maintaining the books. Some of these elements are done more regularly than others to ensure that the books are always up to date. Other elements are completed at certain time periods as necessary to complete a business task.
- You record transactions as you pay bills and make deposits into your company account.
- At least one debit is made to one account, and at least one credit is made to another account.
- The skills needed to become a successful bookkeeper are often acquired through working in a career in the finance industry or even by balancing your personal budgets.
- Bookkeeping is the ongoing recording and organization of the daily financial transactions of a business and is part of a business’s overall accounting processes.
- If you use cash accounting, you record your transaction when cash changes hands.
Daybooks
Since bookkeeping is a more straightforward process than accounting, it is something that many people can (and do) opt to take care of themselves. As your business grows and you begin making higher profits, hiring staff and handling more transactions, however, it may make sense to outsource the details of bookkeeping to someone else. When first starting out, market yourself as a professional who is well-versed in managing accounts, reconciling transactions, providing financial overviews and balancing budgets.
In this module, you will learn how bookkeepers using accounting software to record transactions. You will also further your understanding of the accounting cycle by learning how to create trail balances and produce financial statemnets. Single-entry accounting records all of your transactions once, either as an expense or as income. This method is straightforward and suitable for smaller businesses that don’t have significant inventory or equipment involved in their finances. It doesn’t track the value of your business’s assets and liabilities as well as double-entry accounting does, though. Bookkeeping is the backbone of your accounting and financial systems, and can impact the growth and success of your small business.
You can further analyze your balance sheet and get insight into your business using financial ratios. But you still need to note that the money exited one account and entered another so you don’t accidentally duplicate any of your income or expenses. This happens fifo and lifo accounting when you transfer money from one of your business accounts to another one or to a business credit card. Expenses are all the money that is spent to run the company that is not specifically related to a product or service sold.
We provide third-party links as a convenience and for informational purposes only. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. Intuit accepts no responsibility for the accuracy, legality, or content on these sites. Let us walk you through everything you need to know about the basics of bookkeeping. If you go this route, make sure to brush up on interview questions that’ll help you determine who’s the best fit. Certifications aren’t necessary to become a bookkeeper but can signal to employers that you have the training and knowledge to meet industry standards.