Let's Break It Down to the Basics of Bookkeeping - January Ember

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.

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).

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).

“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!

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)!

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.

The Chart of Accounts are all the “buckets” you need to have set up to record all transactions from:

1. Bank accounts
2. Loan accounts
3. Credit Card accounts
4. Income and expense accounts

After you go through the setup process, and have your accounts set, you can either:

1. Go to Banking in QuickBooks to link with your financial institutions (most big banks and credit cards available)
2. or, manually enter any historical records you need to get you up to date
3. 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.

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.

For any and every business, Implement these 3 BASIC & IMPORTANT bookkeeping Actions:

1. Use bookkeeping software

• QuickBooks is great for start-ups, small and mid-size businesses.

1. Enter all current period transactions,

• set up automated downloading of transactions (eliminate data entry)

1. 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.

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.

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!

Thanks for stopping by! I hope you found something helpful and inspiring.

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– Until next time…have a magical day!

January Ember