5 Tips For Bookkeeping For Startups
A sales manager and customer service representative are just some of the main assets you have as a small-business owner. Now add bookkeeper and accountant to that list to make it more useful. Bookkeeping for startups is very essential. Many people who want bookkeeping for a small business search for best bookkeeping services in Dallas.
Unless you’re truly running an accounting or bookkeeping business, keeping the records for your business can appear overwhelming. Everything from paying your taxes to forecasting for the future aspects of having accurate numbers.
We put together 5 tips to help keep it as easy as possible!
Whether you’re just starting a small business or you’ve had one a few years, these easy tips will help you stay organized.
Know the Basic Bookkeeping and Accounting Jargons
When you decided to initiate your business, you were just eager to make more money than you put in. Now it’s time to get up to speed on mutual bookkeeping and accounting services for startups terms. Don’t be embarrassed if you aren’t aware of all the technical definitions.
What is the sale? A sale is a transaction you receive money for, also called “money in.”
What is the expense? It is also called “money out,” it is something you pay for, like supplies or rent.
What is a liability? A lot of people complicate liability with the expenses. But actually, a liability is something you owe money on, such as a small-business loan or anything like that.
What is an asset? It is an item your business possesses, like property, etc.
What is revenue? It is an income your company makes with a sale. To determine your profit, subtract your expenses from the revenue you got.
What are accounts receivable? Accounts receivable refer to the amount of money your customers owe you when you send them an invoice.
Create Three Important Documents for Financial Success
Now that you know some of the key points, you need to use. Three different documents will help you answer critical queries about your business. These will aid you to determine where to commit funds in the future and how to create your business plan.
Your balance sheet demonstrates the assets, liabilities, and owner’s equity for your business. It’s a breakdown of what you have to give versus what you own. Remember, assets are items possessed by your company, and liabilities are things you owe on. Equity is the worth of your business assets minus the liabilities. It is the value you’d place on your company if you had to put a price tag on it today.
Profit and Loss Statement:
Your profit and loss statement is a summary of your revenue minus expenses for a specific period, usually a quarter of the year at a time. It shows your profits or losses at a specific time.
Cash Flow Statement:
This statement classifies cash flow into three types of activities:
- Operating: How much does your business earns day-to-day?
- Investing: Are the assets you’ve bought for your business paying off?
- Financing: How much cash have you paced in your business? This can also reflect that how much money you’ve. When you’re not making liability payments, you get to keep your profits to pay yourself!
Don’t know how to get started making these documents? You can find free templates available online, but as your business gets more profitable or more complicated, you’ll need to consider working with a professional to maintain these documents.
Separate Personal and Business Expenses
One of the most essential and often most hard rules to follow when running a small business is keeping your business and other special expenses separate.
That line is especially blurry when you first start, so set up a different bank account for your business.
Track Business Expenses
Since you’ll have a separate business account, use it for the transaction of every expense with receipts and a devoted business debit card. This may seem simple but it’s super significant to keep up with an activity for tax purposes and profit monitoring.
Save Significant Bookkeeping Records
It’s smart to keep such types of documents like inventory management and payroll for tax and other business purposes. A good rule of thumb to help you avoid getting caught without a vital document is, if you’re in doubt, scan and save it somewhere
- Bank Statements
- Credit Card Statements (But we recommend you run your business without debt!)
- Canceled Checks
- Customer Invoices
- Customer Payments
- Sales Receipts
- Deposit Slips
- Tax Returns
- 1099 Forms
- Payroll Documentation
Making digital copies of bookkeeping for startups records and storing them in a chosen, password-protected file on your computer is a well-organized way to keep them organized and easily accessible. Or you could get an old-school file box and keep it on hand in your office. Either way, just make sure your storage system is safe from the cyber attacks.