#Bookkeeping for small business plus

For every active account you use, such as cash, accounts payable and accounts receivable, you’ll have separate journals for each one. Journals: Journals are the place bookkeepers store their records of daily transactions. After working out the revenue earned, the costs of goods sold and the expenses, it works out your net profit or loss. Income Statement: This is the financial statement which presents a summary of your financial activity over a certain period of time. These accounts are arranged in the general ledger which also features the balance sheet and the income statement. General Ledger: A general ledger account is an account you use to store, sort and summarise all of your transactions. As a small business owner, your equity is shown in a capital account.Įxpenses: This is all of the money that you spend to operate your business which isn't directly related to the sale of goods or services.

#Bookkeeping for small business plus

The decreased value is what’s measured as depreciation.Įquity: Equity is all of the money you invest in the company as the owner plus all the accumulated profits.

It helps to make sure that records of individual financial transactions are accurate and up-to-date.Ĭapital: This is simply the money or other assets which personally belong to you as the owner and not the actual profit you generate from your business or self-employment.Ĭosts of Goods Sold: This is another simple one, as it’s simply all of the money you spend on products or services which you plan to sell to customers.ĭepreciation: Depreciation is when an asset loses value over time which can happen through wear and tear, for example.

Bookkeeping is the recording of financial transactions on a day-to-day basis. The point of a balance sheet helps to show what your business owns and owes.īookkeeping: Obviously, this is one you need to know or should already know. In this report, you’ll find aspects such as assets, liabilities and the capital of your business. It can range from cash, buildings and land right through to tools, vehicles and furniture.īalance Sheet: A balance sheet is a detailed report which breaks down the financial situation of your business. Again, it can be customers, banks, companies or anyone that purchased or borrowed from your business.Īssets: Assets are simply all the things you or your company owns to help you successfully run the business. An easy example to think about is a mortgage as when you take one out, you sign a contract telling the bank you’ll pay them over a period of time in instalments.Īccounts Receivable: On the flip side, accounts receivable is the account that keeps track of all the money that third parties owe to you.

Basic Tips on Getting Bookkeeping RightĪccounts Payable: Accounts payable is the account which is used to track all of the money that you owe to a third party, such as supplier companies, banks, governments or anyone you borrowed money from.

Basic Bookkeeping Terms You Need to Know.

This blog will highlight even more useful bookkeeping tips and terms that you should be aware of.

Create a new business account, set budget aside for tax, keep your records organised and leave an audit trail.