Top Ten Bookkeeping Basics

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Top Ten Bookkeeping Basics
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• Even if you employ the services of a bookkeeper
  or accountant, as a small business owner, you
  should at least have a basic understanding of the
  different types of accounts that are used to help
  organize your companys finances.
• Listed below are 10 of the top, and most basic
  bookkeeping accounts for small businesses
• Cash account
• Many bookkeepers will use two separate logbooks
  for recording and keeping track of business
  transactions that go through the cash account,
  one for cash receipts and the other for cash
  disbursements.

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• Accounts payable
• Sending money out of the business is a necessary
  evil, but provided your bookkeeper is keeping a
  clear and organized accounts payable, then you
  can be assured that payments will happen on time
  and that no payment is made twice. If a bill is
  paid early, you may even qualify for a business
  discount.
• Accounts receivable
• Payments arent always collected for products or
  services sold, immediately, and without an
  accounts receivable, youll quickly lose track of
  what you may be owed. You also need this to
  ensure that bills and invoices are sent out in a
  timely manner.

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• Loans payable
• This account is where youll find what you may be
  owed and what may be due, from having borrowed
  money to buy equipment and other items for your
  business.
• Inventory
• Its essential that you effectively keep a record
  of all stock, and each product must be accounted
  for and tracked. Physical counts should also be
  carried out at regular intervals, to ensure that
  the data tallies.

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• Purchases account
• Having a functioning purchases account will help
  you when calculating the cost of goods sold, or
  COGS, and this must be subtracted from the sales
  figures to find he gross profit of your company.
  Raw materials or finished products that you buy
  for your business should be recorded and tracked
  in this account.
• Sales account
• Whatever your company sells must be recorded in
  the sales account, and without this being
  maintained accurately and regularly, you wont be
  able to see where your business stands
  financially.

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• Payroll expenses account
• Having an up to date payroll expenses account is
  a vital element of any business, and youll need
  to keep it clear and accurate for tax and
  government reporting.
• Owners equity account
• There are many small businesses that are either
  owned by an individual, or by several people as
  part of a group of partners. Because theyre not
  incorporated, there are no stock shares to be
  divided among the owners, so money invested into
  the business is kept logged in capital
  accounts, while money taken out is recorded in
  drawing accounts. To operate fairly, your
  businesses books must log all owners equity
  accounts.

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• Retained earnings account
• Profits made from a business that are not paid
  out to the owners, and are instead reinvested in
  the company, are tracked in a retained earnings
  account. This account is easy to manage, but is
  important for investors and lenders wanting to
  track the companys progress.
• Communicating with your bookkeeper or accountant
  on a regular basis and trying to understand how
  they function, helps you to have a clearer
  picture of your companys finances, and helps you
  to be more in control of your own business.

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• Many business owners think of bookkeeping as an
  unwelcome chore. But if you understand and make
  effective use of the data your bookkeeper
  collects, bookkeeping can be your best buddy,
  helping you run your business more effectively.
• Miami Bookkeeping was founded with the purpose of
  helping small businesses outsource the
  time-consuming and tedious work known as
  bookkeeping. For more than 10 years, our company
  has been providing bookkeeping services in Miami
  and Coral Gables for hundreds of small
  businesses. If you are looking for bookkeeping in
  Miami or Coral Gables, contact us today at
  support_at_miamibookkeeping.com