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Tips on Bookkeeping Tools C2online

It’s a lot of work running a business and one of the most important, but often-neglected areas, is bookkeeping. It can be overwhelming to keep track of the day-to-day transactions of your business. It’s important to have the proper bookkeeping tools and a system to track everything and understanding what needs to be recorded can make it much easier.

Related Search: Step 1 Bookkeeper Tools

If you are doing your own recording, or have hired a bookkeeper, these are the five categories that need to be accounted for:

1.  Assets

This is what the business owns and can include buildings and equipment--computers, printers, vehicles, machinery, furniture, accounts receivable, inventory and so on. Assets are accounted for on your Balance Sheet.

2. Liabilities

This is what you owe and hasn’t been paid—accounts payable to suppliers and vendors, outstanding loans to banks and for company vehicles, etc. Liabilities are also accounted for on the Balance Sheet.

3. Capital

As a business owner, you may contribute or invest in the business and this becomes part of the Equity section on the Balance Sheet, which is the value of your business belonging to you.

4. Revenue

Money coming into your business, typically from sales of products of services are accounted for on the Income Statement, which some people refer to as the Profit and Loss Statement or P&L.

5. Expenses

Any  money that goes out of your business on a regular basis to keep it operating is categorized as expenses. Expenses can includes wages, rent, office supplies, utility costs, etc. They form part of the Income Statement and are deducted from revenue, resulting in a profit or loss for your business.

Related Search: Step 2 More Bookkeeper Tools

Once you or  your bookkeeper have the daily income and expenses accounted for, you can transfer the data to a monthly accounting system.

Having the proper systems in place will make bookkeeping much simpler and allow you to see quickly how your business is doing financially.

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