When you’re starting up a business, it’s often tempting to cut corners. This is especially true when it comes to accounting. But don’t do it! It’s important to have a solid financial foundation for your business from the very beginning. Here are a few tips for keeping your accounting on the up and up.
Hire a virtual bookkeeper who works for you
If you’re looking for a simple, professional, and approachable way to handle your bookkeeping, look no further than yours truly. Based in San Diego, I offer a range of bookkeeping services for small businesses and personal finances, all done remotely from my home office, whether you need monthly bookkeeping, catch-up and clean-up, or QBO setup and training.
You can get a free 15-minute introductory call with me to discuss your bookkeeping goals and see if we’re a good fit. Contact me today, and let me take care of your books while you focus on growing your business.
Use double-entry accounting
This is the most reliable method for recording financial transactions, and it’s easy to understand once you learn the basics of debits and credits.
A short explanation of how it works: Every financial transaction involves at least two “sides” – a debit and a credit. The accounting equation requires that the total debits always equal the total credits. This keeps the books in balance. The basic accounting equation is Assets = Liabilities + Equity.
When you debit one account, you must credit another account by the same amount to keep the accounting equation in balance. For example, if you spend $100 on supplies, you debit the Supplies Expense for $100 and credit the Cash asset account for $100.
By recording every transaction with equal debits and credits, it ensures all financial activities of the business have been recorded completely and accurately. It also makes it easier to trace transactions and find errors.
Keep track of expenses as they are incurred
This is especially important for small purchases, like office supplies or equipment repairs, because they will add up; if you don’t keep track of these things when they’re purchased, it can be difficult to remember what you spent money on later on.
Keep track of all your assets and liabilities
Assets include equipment, vehicles, computers, furniture, and so on. Liabilities include things like loans and credit card balances. Keeping track of both means to keep track of what your business owns and what it owes. If you’re not sure whether something is an asset or a liability, talk to your bookkeeper about it.
Use accounting software
While manually tracking finances with double-entry accounting works, using accounting software like QuickBooks Online, Xero, or FreshBooks makes the process much more efficient.
Software automates many routine tasks like generating invoices and tracking expenses. It also ensures all transactions are recorded correctly according to generally accepted accounting principles (GAAP).
