Bookkeeping Basics – What to Consider to Keep Your Books Organized
Bookkeeping can sometimes be a daunting and tedious job, especially if your books are in a messy and melancholic state. There may be a couple of times when you just want to give up and rip your books into pages before throwing them out to the wind at the edge of a cliff while shouting, “It’s accrual world!” in frustration. Unfortunately, no matter how tempting that thought might be, you shouldn’t go through with it.
It’s not an easy thing to do: stop being sad about your accounting problems and looking at the bright side in a flash. People may think it’s a walk in the park, but it’s really not.
The great thing is, help is always available. Below are the things you’ll need to consider to help you pull through that dark pit your books may currently be in (and prevent a relapse to happen again) successfully.
- Retained Earnings Account
The company profits that are not paid out to the owners but rather reinvested in the business are what the retained earning account is tracking. If you want to track how your company has fared since the beginning of time, this is the first place where you should look. Since these earnings are cumulative, they will appear as a total of the money your company has retained from the start.
- Owner’s Equity Account
Also called net assets, this account tracks down the total amount of money an owner has invested in the business minus all the liabilities.
- Payroll Expenses Account
The costs that go into the payroll are usually the highest expenses of many businesses. To meet those government and tax requirements, managing this account is vital so that you won’t ever have to feel desperate towards the deadline again.
- Purchases Account
The raw materials or finished goods that you’ve acquired for your business can be tracked in the purchases account. Once you’ve deducted the Cost of Goods Sold (COGS) from your sales, you’ll be able to know your company’s gross profit. That is why managing this account is also essential.
- Sales Account
All the incoming revenues are tracked in this account. That’s why recording your sales frequently and accurately will help you be on top of where your business stands.
- Loans Payable Account
To keep track of the important payments and due dates that you need to deal with in terms of your company’s loans or borrowed money, the loans payable account should be updated regularly.
- Accounts Payable
Accurate encoding of records will help you track the amount of money or payments you’re sending out. Whether it’s your company bills or other fees that need to be paid, this is the account you need to look into.
- Inventory Account
The products that have yet to be solved need to be tracked and accounted for carefully. Doing physical counting by hand is necessary to ensure that the numbers are the same as those in the books.
- Accounts Receivable
The receivables are the amount of money your customers have yet to pay you. It is fundamental to keep track of this account in order to know when to send out the bills and invoices and avoid delays.
- Cash Account
The cash account is usually divided by bookkeepers into two journals, namely, the cash receipts and cash disbursements, to track down every single transaction in the business that ever occurred carefully.
The Books of Life
People always say that while there is life, there is hope. So, if you ever feel like your books are hopeless, think again! Keeping up with your accounts and finances is worth the fight. And if you think your accounting problems are never-ending, fret not. There are professionals who are more than qualified to help you with that because you deserve to have peace of mind.
Whether it’s financial, tax planning or bookkeeping advice or services you seek, you can always reach out and turn to Accountrepreneur for help. Relieve yourself of the stress. We’d be more than happy to assist you, so your business can reach its full potential. Get in touch today!