Boss Mom had to start somewhere, so here she goes! Today I am going to kick off the "BOSS - Business" segment of the blog with a break down on the Basics of Bookkeeping.
By day, as a CPA/Forensic Accountant and financial advisor, I find myself constantly frustrated and often pulling my beautiful long red hair out due to a constant lack of proper (or none at all) bookkeeping.
We all want to make more money, work for ourselves and save as much as possible. So how do you start and run a successful business? It is all starts with the money! You can make money all day, but if you don’t know how to properly track your income and your spending, a successful business may not be what you get
Many people start a small business, even a blog, and neglect the first fundamental concept of finance and budgeting – recording and tracking! In business, we call this “bookkeeping”. I’d like to help you save time and money in your lives and business by educating you on the importance of bookkeeping for any business, even a blog!
This post contains affiliate links. This means I may receive a small commission for purchases derived from those links at no cost to you. This helps support the blog. Thank you in advance for your support!
Disclosure: I will do my best to simplify accounting concepts, but understand, not all bookkeeping and accounting concepts are "simple" to everyone. My goal is to attempt to simplify in my way. Every teacher has their own style!
Let me start by saying this is not an accounting course, a replacement for proper education, or anything of the like. This is just me sharing, hoping I can illuminate the importance of business matters that seem to get brushed under the rug a lot of the time.
Financial education is the most important thing in business, in my opinion, it is the key to success!
Let's talk about the basics of bookkeeping. What is Bookkeeping (you already know, ok skip ahead smarty pants)?
What is bookkeeping? Think of your checkbook register, your bank account, your credit card year end summary statement. All of these items are “personal accounts”, that would be found in your “personal books”.
Bookkeeping, often used synonymously with accounting, is the process of reporting transactions that occur in a business (for you, all the transactions of your life).
Bookkeeping is the recording and reporting of business transactions. In short, tell me where the money came from and where the money went.
The most basic way to think about bookkeeping is to imagine your own bank account: your paycheck (income) goes in, you pay your bills (expenses), money goes out, whatever is left is savings (net income).
How do you keep Books?
“Books”, as they are often called, are where all of your business transactions are recorded and stored. Back in the old days, these were on giant green ledger sheets!
Thanks to glorious technology, bookkeeping is the easiest its ever been! There are tons of bookkeeping software options available now! There is no need to go mad over this task!
Use bookkeeping software like QuickBooks to easily manage your "books"!
The very first time I was exposed to bookkeeping I used QuickBooks to set up books and records for the company I worked for where none had ever existed before. Funny, that is the very thing that set me on the path to becoming a CPA (I was on path to be the first woman President…went slightly off track)!
Where do you start once you get your bookkeeping software?
QuickBooks is the bookkeeping software I most commonly recommend to business owners. Due to its ease of use I find most clients can navigate their way through it pretty well.
Once you get your QuickBooks bookkeeping software, regardless of the edition type you choose, you’ll have to go through the initial setup.
The first Stage for proper bookkeeping in the setup is creating the Chart of Accounts. QuickBooks is great in this regard as well. Depending on the type of business you select, QuickBooks will populate a generic Chart of Accounts for you.
What is the Chart of Accounts?
The Chart of Accounts are all the “buckets” you need to have set up to record all transactions from:
- Bank accounts
- Loan accounts
- Credit Card accounts
- Income and expense accounts
After you go through the setup process, and have your accounts set, you can either:
- Go to Banking in QuickBooks to link with your financial institutions (most big banks and credit cards available)
- or, manually enter any historical records you need to get you up to date
- If you are starting from scratch, you won’t have anything old to enter
I highly recommend taking a QuickBooks learning course to anyone running a business, especially if you have never had an accounting or bookkeeping course of any kind.
Perform bank and credit card Reconciliations! This is the most important step that small business owners neglect!
One of my professors once said, if Cash is correct you can feel pretty good about your bookkeeping!
Every month, get your bank statements and perform a bank reconciliation on bank accounts, credit card accounts, and loan accounts.
QuickBooks has a very easy to use feature for performing bank reconciliations. If there is a discrepancy, QuickBooks will try to help you find the error at that time and fix it.
The takeaway: My Top 3 most basic & important Bookkeeping Tips
For any and every business, Implement these 3 BASIC & IMPORTANT bookkeeping Actions:
- Use bookkeeping software
- QuickBooks is great for start-ups, small and mid-size businesses.
- Enter all current period transactions,
- set up automated downloading of transactions (eliminate data entry)
- Perform Bank and Credit Card Reconciliations monthly
In the day and age of technology we live in, there is really no excuse for anyone to be doing manual bookkeeping data entry anymore.
My advice is to get with the times, automate, and track everything your business is doing.
Likewise, you should track your personal finances as well!
If you are a small business owner, you can track your personal activity within your QuickBooks by setting it up as a separate company, or even using “classes” (more detailed than the scope of this post).
If you only need to track personal finances, I recommend using Quicken, as it is designed for personal use.
Tracking your personal finances helps if you are a small business owner; often our personal funds and credit are used to fund our new business - that is what we call "Capital", or "Officer's loans".
There are so many wonderful tools available to automate the day to day bookkeeping and accounting functions that are necessary to maintain and grow any successful business.
You will hear me repeat this a million times, there is nothing more important than financial reporting! The world revolves around it. The stock market is driven by it!
All of that data, is simply bookkeeping at its basics...rolled up into financial statements which are ultimately used to determine stock prices.
Well guys, I promised I would talk about business too, so there you have it! Bookkeeping broken down to the 3 basic and most important things I feel every business should be doing and many are not! Every day I speak to business owners and so many do not do these 3 basic and necessary bookkeeping functions.
It surprises me at times, but then I realized, maybe people just really don’t understand how important all this really is…maybe I can try to help. We all have our own special gifts and talents and methods of getting through to some where others have failed.
Here is my version, my attempt, to impart my wisdom in the hopes it may help someone who may not know how necessary these things are and how much easier it will be to grow their business if they start doing this immediately!
DO these 3 bookkeeping tasks immediately to improve your life and grow your business!
FORWARD THINKING: Coming next
In the coming episodes I’ll be talking about some questions a lot of people ask me, and don’t seem to really know much about:
- Financial planning
- Retirement options
- for individuals and
- small businesses
- Finding Inexpensive ways to do Expensive things
- Best Places to put your money for investments
- small investments
- big investments
- When to start saving for retirement? – Yesterday!
Thanks for stopping by!
Save this and share!
Until next time…keep smiling, improve every day, and build a life you love!
Drumroll please…Here it is, the moment you’ve all been waiting for…my Harry Potter Hogwarts House transformation first look reveal! Last year sparked the beginning of our Harry Potter obsession, and I can justifiably say, it more than qualifies as an obsession! When my daughter said she wanted a Harry Potter Birthday, I was on the job with making magic in mind! We love to go to theme parks like Universal Studios and Disney, why, because we want to be immersed in the experience, we want to feel like we are IN the movie. That is the feeling I wanted to create in my own for the party. I wanted these kids to feel like they just walked off the train and checked their bags for orientation at Hogwarts. To start this off, I want to show you the easiest thing I made for the party, so if you are looking for a fast, easy decor idea, then look no further! The easiest thing I made for the party: Harry Potter flickering LED candles. One of my absolute favorite things I made for our Hogwarts House transformation, were these super easy Harry Potter candles! With just 2 things needed: Led candle and a rub on cling (Harry Potter themed in this case) – and boom, a custom, removable, specialty candle! This post contains affiliate links. This means I may receive a small commission for purchases derived from those links at no cost to you. This helps support the blog. Thank you in advance for your support! It only takes 2 minutes to make these adorable candles! This is as easy 1…2…3, just peel & stick! Can it get any easier than that? These peel and stick Harry Potter decals work really great on these glass flickering LED candles! I use this style of LED candle all over my house. I added peel & stick decals to many of my different candles around the Hogwarts House. Get creative with some of these decals, they are easy to add and remove for an easy Harry Potter themed decoration! To Shop my Harry Potter Idea List on Amazon click here! These melamine Hogwarts House Crest plates are really lovely! Layer with several chargers for an elegant look! Hogwarts House crest plates add an elegant touch to the dining table! Another adorable peel & stick on decal – I added these to my Rae Dun Lemonade and Iced Tea Pitchers! The scarf worked perfectly for the table runner. Froggy loves his Hogwarts House! Another lovely set of candles on my accent wall, these Hogwarts House crests look amazing! I love my little Gringott’s Bank with the goblin cameo in my office, it worked out so nicely! You can see how I always move things around… Gringott’s Bank Create little nooks where you can with different movie scenes you love. I hope you enjoyed seeing the first look at how the Hogwarts house took shape. It changed many many, many times, so you’ll see a lol of different stuff moved around. That’s the only way to truly figure out where you want things to go, stick it there, then move it! There is a lot more to come so subscribe and follow me on social media for new updates. I’m really excited to see how Halloween is going to come to life in my house this year, especially since I have so much awesome Harry Potter decor now! BOSS MOM DIY CLUB! Join the club and get updated on new posts and inspiration! Email Subscribe You have been successfully Subscribed! Ops! Something went wrong, please try again. Thanks for stopping by! Save this and share! Until next time…keep smiling, improve every day, and build a life you love! Yours Truly, January
Decorating for Halloween doesn’t have to be CHEESY! Take a look at some Elegant Halloween decorating ideas that are easy and beautiful!
We started our road trip from Lisbon and drove through the country to Seville…making magical discoveries along the way! Checkout this amazing 7 day road trip through Andalucia Spain!