Bookkeeping is a fundamental aspect of any successful business. It refers to the process of recording and organizing financial transactions such as sales, purchases, receipts, and payments. Good bookkeeping ensures that a company’s financial records are accurate, up-to-date, and easy to understand. New to bookkeeping or accounting? Let’s take a look at some bookkeeping basics that every business owner should know.

1. Choose a bookkeeping method
   There are two methods of bookkeeping: single-entry and double-entry. Single-entry bookkeeping is simple and suitable for small businesses. Double-entry bookkeeping, on the other hand, is more complex but provides a more accurate picture of a company’s financial health.
2. Keep track of all financial transactions
   To maintain accurate financial records, it’s important to record all financial transactions, including sales, expenses, and payments. You can use accounting software or create a spreadsheet to record your transactions.
3. Organize receipts and invoices
   Keep all your receipts and invoices organized and stored in a safe place. This will help you track your expenses and make it easier to file taxes.
4. Reconcile bank statements
   Reconciling your bank statements is an important part of bookkeeping. This involves comparing your bank statement to your financial records to ensure that all transactions have been recorded correctly.
5. Create financial statements
   Financial statements provide a snapshot of a company’s financial health. These include the balance sheet, income statement, and cash flow statement. You can create these statements using accounting software or by hiring an accountant.
6. Understand accounts payable and accounts receivable
   Accounts payable are the bills that you owe to suppliers or vendors, while accounts receivable are the payments that your customers owe you. It’s important to keep track of these accounts to ensure that you have enough cash flow to pay your bills and operate your business.
7. Separate personal and business finances
   Keeping your personal finances separate from your business finances can be a challenge for new startups or young entrepreneurs. It’s critical to keep accurate records for legal reasons, but it also makes it easier to file taxes.

Bookkeeping is essential for every business, regardless of its size. It helps you keep track of your finances, make informed decisions, and stay compliant with tax laws. By following these bookkeeping basics, you can ensure that your financial records are accurate, up-to-date, and organized. If you’re unsure about bookkeeping or need help, give us a shout! Propel helps reduce the stress of finances and accounting with our complete bookkeeping services for small businesses.