Bookkeeping Basics #1: Understand the Fundamentals

Understand the difference and the importance of tracking personal finances separately from business finances.

Learn why it's important to properly and accurately track your company's financial activity...  And it's NOT only about taxes!

How is your company set up and what does that mean to both your bookkeeping but also your entire company's operation?

Which one is right for your company?  Sole proprietorship?  Partnership?  Corporation?  LLC?

Exactly WHAT is bookkeeping and WHY do we do it?

There are a lot of options on WHO actually does your bookkeeping, but you can't just completely hand it off.  Find out why...

Every day?  Once a week?  What's right for your company for WHEN the work gets done?

Also, WHERE is not only the best place to do the work, but to store your records?

Consistency...  It makes your work easier and more accurate.  But how do you accomplish it?

Understand exactly what a financial transaction is and how it effects your business.

Learn how Assets, Liabilities and Equity relate to each other and why they must ALWAYS stay in balance.

Understand exactly what an account is and how to organize them into your personalized Chart of Accounts.

Learn the difference between selling products, services and more.

Realize the difference between issuing invoices, sales receipts and customer statements and when each one is the right choice.

Examine the difference between different types of invoices as well as what information should be on each type.

Just because you have more money in your account than you did before, does not mean you've earned income.  Learn the difference.

Not all expenditures by your business are expenses.  Take a look at what is and what isn't considered a company expense.

Determine which of your company's expenses are considered the "Cost of Goods Sold" for your particular product or service.

Be able to organize all of your different expenses into a system that makes analysis easier.

Learn about a simple tool that makes organizing your bookkeeping much easier.

Learn exactly what an Asset is as well as the different types your company may own.

Understand the difference between spending money on an expense and just switching one type of asset for another.

Determine what happens when your company owes both short-term and long-term debts to others.

Understand how the owner(s)'s value of their ownership in the company is calculated and determined.

Investigate what happens when your company uses credit to keep its operation going.

Understand what's involved with letting your customers pay on credit.

Sometimes your customers take too long to pay or don't pay at all.  Learn how you should handle the situation and what steps are involved.

Take a quick look at what Financial Statements are and how they are used by both your company and outsiders.

Examine the difference between the two basic formats of financial reporting and their impact on your business operations.

Examine the parts of an Income Statement (or Profit & Loss Report) and learn to read them.

Understand the Balance Sheet and what it illustrates about your company's financial health.

Look at the reports used to track the owner's value of their investment.

Understand the basic methods for tracking what's owed to your company as well as what it owes to others when it uses short-term credit.

Examine what is required to be reimbursed for mileage on personal or company vehicles along with what is and isn't allowed.

Understand what credit terms mean on invoices and statements along with when you can receive small discounts for paying early.

Look at discounts your vendors may give you for a wide variety of reasons when you purchase their products.

Understand not only who is responsible for paying for shipping but who is responsible for the actual freight until it arrives at your location.

Examine some factors in maintaining good, accurate business records.