If you manage a retail store and you are planning to get started on the work of bookkeeping, but have no idea how to start with the task, this is a step-by-step guide to assist.
Book keeping Crash Course 101:
What is bookkeeping? Bookkeeping is a method of monitoring your business’s financials as well as determining where your earnings go, and where your earnings are coming from as well as the tax deductions that you will be able to get.
Steps in Bookkeeping:
1. Keep your personal and business expenses separate. To make sure that the IRS knows what your company is doing, ensure that you have funds in each category that are separate. It is also essential that you have separate bank accounts that are for your personal expenses and your business’s budget.
2. One entry vs. Double entry. Double entry allows you to keep track of where your money is being transferred and the source it came from. You will essentially record the transactions twice. One is called creditand then place the money in an account called debit. You will be able to identify if your balance of credit and debit is equal by having them similar. A single entry method tracks each transaction as it occurs This is ideal for sole proprietorships and businesses without employees.
3. Cash vs. Accrual Basis. Revenue is only earned from a cash-based basis. As an example, if you make a deposit on your bank account, this is what you are able to recognize. On an accrual basis it is when it is earned, like completing a project and making an invoice.