Bookkeeping 101: Bookkeeping Basics for Small Businesses

Investing in and implementing the wrong accounting software can be costly. Save your time and money by knowing how to find the best accounting solution for your business. Become familiar with small business accounting processes, tools, and services.

As procrastination-worthy as it may seem, bookkeeping is a necessary part of successfully running your business. If your Retained Earnings need to be divided among owners or partners, your accountant should help you. Here’s how to reconcile accounts and tips for checking everything for the year. Once you find https://www.bookstime.com/ outstanding balances, you can send statements to your customers. Select the month to start your fiscal year so QuickBooks can set your ledgers (behind the scene). Implementing a clear client communication strategy will ensure effective client relationship management and help you build trust with your clients.

How long does it take to start a bookkeeper career?

Whichever structure you choose at the beginning, know that it will likely evolve throughout the maturity of your firm. For instance, a firm might accept the risk and start as unincorporated to avoid the incorporation fees. Over time, as additional owners move into the entity structure, the firm can add additional shareholders or can reorganize as a partnership. Your location and your goals will determine cost in several ways, including whether you want to start a traditional brick and mortar firm or are looking to create a virtual office environment. Outside of those circumstances, a fixed fee is recommended and preferred. As your skill and expertise grow, so will your abilities to complete tasks quickly.

Typically, double-entry bookkeeping uses accrual accounting for liabilities, equities, assets, expenses and revenue. You will likely want to establish a business banking account and credit card. This can help you keep your own business expenses organized and separate.

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According to the US Bureau of Labor Statistics (BLS), most bookkeepers can learn the profession’s basics in about six months [3]. Once you become a qualified bookkeeper, you can work as a permanent employee or freelancer. Managing the general ledger is part of your daily responsibilities as a bookkeeper. You may determine if any payments are due, submit them, and record them in the financial ledger.

While they seem similar at first glance, bookkeeping and accounting are two very different mediums. Bookkeeping serves as more of a preliminary function through the straightforward recording and organizing of financial information. Accounting takes that information and expands on it through analyzing and interpreting the data. Although you certainly can do formal bookkeeping training (e.g., online bookkeeping courses, relevant degree), many bookkeepers simply learn the ropes through on-the-job training. It usually takes about six months of practice to get the hang of it. The good news is that you can do bookkeeping training from the comfort of your home.

Accrual Accounting

These are key skills for bookkeepers, so if you’re not a fan of math at all, it may not be the best career path. An accountant needs strong and accurate bookkeeping and payroll services bookkeeping to do their work. They look at all of the financial details of a company so they can make larger decisions about how the business operates.