Keeping track of all your financial information can feel like a never-ending process that requires constant review and updating, especially if you have to do it yourself.
That’s why there are so many ways to keep tabs on your money these days. You can use apps or software to help you organize your accounts, you can hire someone to do it for you, or you can just learn how to do basic book keeping!
Basic book keeping is the practice of recording transactions in an organized way to understand where your business has money and where it doesn’t. This kind of accounting isn’t very complicated, but it will give you a clear picture of what’s happening with your finances.
You don’t need to know any numbers to do simple book keeping, but it helps to be at least vaguely familiar with them. Luckily, anyone can pick up the basics quickly through some easy lessons and tutorials.
It’s good to be organized, but you have to start from somewhere. Before you can organize all of your finances, you need to set up some basic documents.
These should include:
A business license – this varies state by state, but general rules are that you must have one before you can do business as an individual or as a business entity (like LLC or Corp)
– this varies state by state, but general rules are that you must have one before you can do business as an individual or as a business entity (like LLC or Corp) A receipt book to keep receipts in – these are very helpful when it comes time to file taxes!
to keep receipts in – these are very helpwhen it comes time to file taxes! Notebooks to store important information such as bills, notes about payments, etc.
, notes about payments, etc. Keep at least two copies of each document. You never know when something will go missing!
. You never know when something will go Missing! Use free online resources to track your documents. This helps if someone has to pick up where you left off keeping tabs is always a great idea.
for tracking your documents. This helps if someone has to pick up where you left off keeping tabs is always a great idea. Make sure to update your documents frequently! If anything gets lost, people may assume everything else is fine because they didn’t see a change here or there.
Track how much money you made with each sale. Keep track of this information in a simple notebook or spreadsheet program, like Microsoft Excel.
Keep a record of when each sale was completed-date, buyer’s name, etc. Also keep a notes section where you can describe what the sale is for and who it belongs to. This helps you organize the book keeping later on!
Record the amount that you received in the form of cash, check, or both in the “Cash In” column and then enter that into the bank account column next.
Do the same thing with receipts in the “Purchase�” column and input those numbers into the income statement column.
This process will create a beautiful chart that shows a direct correlation between sales and income! Stay organized by using notebooks or software to store all of this data.
Keeping track of all your business spending can be tricky, especially if you’re running a small business. It is best to do as much of your book keeping yourself as possible since you will have more control over what information you include in these books.
By recording your receipts and using an easy-to-use accounting software or tool, you can easily organize, sort, and find past purchases. This helps you keep tabs on where most of your money goes and allows you to identify any potential cost saving opportunities.
You should also maintain adequate backups of your records. More advanced users may choose to scan paper documents into their computer or use scanning apps to preserve old materials.
Running a business means there are always new things coming up, so it is important to be able to access your financials at any time.
The next step in simple book keeping is calculating your profit and loss (P&L) statements. This is done by taking all of your income sources and adding them up, then subtracting any major outlays or debts that you have.
Your income includes what you receive from sales, dividends, interest, capital gains, and anything else you earn money from while running your business. Your expenses include monthly bills such as rent or mortgage, utilities, phone costs, and other large fixed expenses.
It’s very important to pay all of your bills, but it is even more crucial that you do not have a lot of debt. If you have too much credit card debt or business loans with high interest rates, it can hurt your ability to start up new businesses because lenders will ask about your ability to repay these debts.
It’s also difficult to get good financing if you have large amounts of debt. Many potential investors look at how well you handle money as part of their decision-making process, so being able to show them that you are conscious of budgeting and spending makes them feel more confident in giving you the loan that you want.
There are many ways to manage your financial obligations effectively. You can use various apps and software to help you stay organized. There are some free programs that can be helpful as well. By keeping an eye on your finances, you will know just when you should take action to improve your situation.
It’s very important that you save all of your business receipts. These include copies of bills, invoices, gift cards, and more!
By keeping track of these things, it is easy to do simple bookkeeping at a later date.
Bookkeepers can scan documents into software or use pen-and-paper to organize them. Some even have built in features where you can input information such as phone calls or meetings while organizing the documents.
This way, you don’t need to remember anything about what you put into the system, because everything is already there.
A more formal way to do business financials is by doing a monthly, quarterly, or annual balance sheet. This is also referred to as a general ledger entry, an account statement, or just a normal internal record keeping process.
A balance sheet is simply a listing of your company’s assets (properties, equipment, money), debts (payments you owe), and equity (ownership in the company). It is done at a specific time frame which makes it possible to compare one period to another or year-to-year.
There are several types of balance sheets that depend on what type of information you want to see. The most common ones are:
Current: this gives you a snapshot of how much money you have right now and how much debt and equity you have
This gives you a snapshot of how much money you have right now and how much debt and equity you have Past: this looks back a certain number of months or years to give you a better understanding of long term performance
this looks back a certain number of months or years to give You can add additional columns to include other non-financial data such as sales, marketing, etc.
It’s important to keep your business accounting in good order, which means making sure that you have all of the necessary software and systems as well as frequent updates to each one.
Online tools such as QuickBooks can be very helpful in keeping track of accounts, but what if you don’t have it? You can still do basic book-keeping! All major computer operating systems come with free file management apps that can help you organize receipts, pay bills, record expenses, and update financial records.
There are also a number of free cloud storage services (like Google Drive or Dropbox) that allow you to sync all of your files across different devices. This makes it easy to access your documents anywhere you have internet connection.
Google Sheets is another tool that many people use to manage their finances. With sheets, you can create templates and add comments to describe things (just make sure to spell everything correctly!). You can then connect these spreadsheets together using linkable fields so that you can easily move information around between them.
These are just some simple ways to start recording your personal transactions, but once you get the basics down, it will evolve into more advanced practices like double entry bookkeeping or banking jargon.