Five Bookkeeping Basics You Need to Knowcustomonecfo
As a small business owner in Des Moines IA? Do you handle your accounting internally? If so, there are five basic bookkeeping practices you need to nail. Keep reading for small business accounting tips from Des Moines CPA CustomOne CFO & Controllers.
These are the small business bookkeeping basics that every small business owner and entrepreneur needs to know. If you have any questions or need assistance with your Des Moines accounting, contact us. CustomOne CFO & Controllers CPAs, accountants and financial experts are here to help you.
Five Bookkeeping Basics You Need To Know
- Learn & Understand Double Entry Bookkeeping
Many small companies just keep track of their incoming payments and outgoing expenses in one log. While this is OK if you’re just keeping a track of how much you make and spend as an individual, single-entry bookkeeping is not well suited for businesses dealing with ongoing credits and debits. Double-entry bookkeeping records each transaction once, with its effects registering in two sides of your accounting reports: Debit and Credit. The reason you record each transaction like this is to show how your debts and credits affect your overall company worth. Assets contribute to your companies worth (debits) while liabilities/credits, including debt, decrease your total value.
- Keep Receipts of All Purchases and Expenses
With a record of every company transaction, you’ll be in the clear come tax season and make the most of your deductions. If you need to create a financial report, you’ll need receipts to get a current look at your company’s accounts payable and the money you’ve already invested in business expenses. A receipt is any recording of a financial transaction. Ideally, your vendors and suppliers will give you a receipt for your purchases. You should always save receipts for incidentals, like office supplies and business transportation expenses. If you don’t have any of these things, just make a note of all business purchases and expenses in your accounting ledger.
- Always Gives Your Customers an Invoice
For the same reason you always want to get a receipt for your purchases and business expenses, you need to supply your clients with an invoice.
Invoices communicate and keep track of:
- Sales: The amount, price, etc of products or services you’ve sold to customers.
- Accounts Receivable: When you are supposed to be paid for your services, along with confirmation when the account is balanced.
- Contact Information: Invoices keep you and your client in touch with important information like job IDs, phone numbers, and billing terms.
- Choose Cash or Accrual Accounting
Will you always receive a cash payment at the time you render services or deliver goods? For “cash businesses” and one-person operations that don’t rely on credit or invoicing, cash bookkeeping may be best for you.
If you plan on extending lines of credit to your customers, or if you’ll open credit accounts with your vendors and suppliers, you’ll want to practice accrual accounting. This keeps track of ongoing credits and debts while noting what accounts are current and how much cash is on hand.
- You’ll Start By Doing It Yourself — But When You Grow, You’ll Need a CFO
When you start out your small business, you’ll probably want to do all your accounting and bookkeeping on your own. By nailing the basics, you’ll be fine to manage your basic accounting needs while getting your company going.\
Once your operation generates a large volume of sales, hires many employees, or creates significant profit, you’ll want a CFO and/or financial controller to assist you with your business finances.
A company controller is your chief accountant, responsible for all business bookkeeping and ledgers. They create financial reports that tell business owners and/or shareholders how the company is doing and how its expected to perform. A Chief Financial Officer (CFO) is like a controller; but instead of just generating this accounting data, a CFO makes strategic financial decisions for the company.
CustomOne CFO & Controllers – Des Moines CPA
We hope this article helps you understand the basic bookkeeping practices every small business owner should know. Learn and implement these five small business accounting tips and you’ll save time and money.
Don’t have the time to master bookkeeping and run your small business? Get a Certified Public Accountant and CFO in Des Moines Iowa to help you. Let CustomOne CFO & Controllers create a custom financial control solutions for small and medium businesses in Des Moines.
Let our Des Moines accountants and CFOs take care of your bookkeeping and accounting needs. Contact us today and see how CustomOne CFO & Controllers’ financial services can benefit your business.