{"id":31655,"date":"2021-01-07T08:00:00","date_gmt":"2021-01-07T13:00:00","guid":{"rendered":"https:\/\/honeybook.site.strattic.io\/?p=31655"},"modified":"2022-10-04T09:32:55","modified_gmt":"2022-10-04T16:32:55","slug":"streamline-bookkeeping-business","status":"publish","type":"post","link":"https:\/\/hbbadmin.dev.reliablepenguin.com\/blog\/streamline-bookkeeping-business","title":{"rendered":"Understanding Proper Bookkeeping for Your Business"},"content":{"rendered":"\n

Learn how to use proper bookkeeping for your business so you can take care of accounting, taxes, financial planning, and more.<\/span><\/em><\/p>\n\n\n\n

\"Woman<\/figure>\n\n\n\n

Have you been thinking about how to streamline bookkeeping for your business? Maybe it\u2019s a brand new year and you\u2019re ready to meet new financial goals. Maybe you\u2019re preparing for DIY tax filing and you realize your books could be much more organized.<\/p>\n\n\n\n

Whatever you\u2019ve decided, proper bookkeeping is key for your taxes, future planning, business financial health, and much more. Learning how to do proper bookkeeping is also essential whether you\u2019re trying to do it on your own or looking to hire a professional. Either way, you need to understand the basics of keeping your books and how to stay organized in the long term.<\/p>\n\n\n\n

What goes into bookkeeping for small business owners?<\/h2>\n\n\n\n

Before we dive in, let\u2019s take it back to basics. Regardless of where you are in your business journey, it can be confusing to understand the difference between accounting and bookkeeping, and what all goes into business finances.<\/p>\n\n\n\n

While bookkeeping refers to the actual record-keeping of your finances, while accounting is the analysis of your records to make decisions about investments, pricing, tax filing, and more. While a bookkeer\u2019s primary job is to record transactions, an accountant creates financial statements and financial reports<\/a> using the information recorded.<\/p>\n\n\n\n

Assets, liabilities, and equity<\/h3>\n\n\n\n

Within bookkeeping, you\u2019ll need to track your assets, liabilities and equity. Here\u2019s a brief description of what each means and how you\u2019ll use them for your business:<\/p>\n\n\n\n

  • Assets – <\/strong>Anything that your business owns with a value attached to it. This includes your accounts receivable (expected client payments), cash, and business property.<\/li>
  • Liabilities – <\/strong>These include anything you know, such as accounts payable (money due to vendors or contractors), loans, and salaries.<\/li>
  • Equity – <\/strong>Equity is simply your assets minus your liabilities, which gives you your business\u2019s net worth.<\/li><\/ul>\n\n\n\n

    With proper bookkeeping, you\u2019ll continually track each of these categories to have a better picture of your business\u2019s financial transactions, activity, and health.<\/p>\n\n\n\n

    Income statements<\/h3>\n\n\n\n

    Another key part of bookkeeping is creating your income statements (also known as profit and loss), through which you\u2019ll track your revenue, expenses, and costs. Here are a couple more definitions to help you understand what goes into each income statement:<\/p>\n\n\n\n

    • Revenue<\/strong> – Your total amount of income<\/li>
    • Expenses<\/strong> – Anything intentionally spent to help generate revenue (salaries, marketing, office, rent, etc.)<\/li>
    • Profit<\/strong> – Revenue minus expenses and other debits<\/li>
    • Loss<\/strong> – Any other debits not associated with typical day-to-day business management (settlements, asset sales, etc.)<\/li><\/ul>\n\n\n\n

      Getting set up for proper bookkeeping<\/h2>\n\n\n\n

      To get started with your bookkeeping, you first need to make sure that you are tracking all money coming in and out of your business. We recommend getting started at the beginning of the year, but you can always start organizing at any point.<\/p>\n\n\n\n

      Find an accounting software that you can use to categorize all your income and expenses. With one like Quickbooks, you can connect all your business bank accounts and credit cards, which then automatically pull transactions from your bank feed into the system.<\/p>\n\n\n\n