Now that you are managing your own business, you just need to know how to how to handle the books! Learn it the quickest way and not the hardest, because you need to ensure that your accounts are clear and presented in a lucid fashion to bankers, and your own accountant. Accounting for small businesses is different from housekeeping budgets or those of large corporations. There are of course fundamentals to all accounts; measures of the financial health of your business.

  • Credit and balances
  • Profit and loss
  • Balance sheet

MYOB - Basic costs

Now, let's start at the very beginning. Most businesses are set up after a few years of working so before you start, take a cold hard look at your finance potential. Crunch the numbers; your new business should pay back the salary of your current job, or at least the expenses you need for living. All together, this means that you need about 40 percent more to pay taxes and social security. Let us go ahead and understand how to keep the accounts.

Some Accounting Terms

  • Accounting: This is a way to take a business' income and expenses. It helps in the calculations of the finances and taxation of your business.
  • Bookkeeping: The data made of amounts, dates, and sources of all earning and spending. This has to be accurate and comprehensive.
  • Invoice: Written record of a transaction, which are given to a customer or client when asking for payment. It can be a bill or statement.
  • Ledger: This is a special book where what credited or debited is recorded. It should be able to give full and complete details.
  • Receipt: This is a written record the transaction that has taken place, given to the buyer with all the details can also be called a sales slips.
  • Balance Sheet: This is a statement listing assets, liabilities, and net worth. In larger business, it may list equity.
  • Accounts Payable: Simply put what we owe, unpaid utility bills and purchases credits and more.
  • Accounts Receivable: What is owed to you, and what you will receive -this includes payments, and other receivables.
  • Bad Debt: Money that is owed to you and when there are very little chances you will get them back. You write these off!
  • Gross Income: All the income without taking off the other expenses that you have and will incur.
  • Net income: From gross income without expenses, it gives a true picture of the profit for the given year.

Basic Facts on Bookkeeping

  • Remember to keep all receipts and records of every payment and all expenditure made. It could be fuel bills, utility, computer hardware costs and much more.
  • Regularly keep a summary of your income and expenditure records.
  • The summaries will help you create proper financial reports.
  • You could use a well known easy to use computer software to make all the tasks easier.