Principles of Small Business Bookkeeping

Companies normally have a lot of financial transactions. They need to keep track the flow of their money. The activity of recording and tracking all the financial transactions performed and done by the company is bookkeeping.

Bookkeeping is not only for big companies and corporations. Single individuals and home businesses also do bookkeeping. Although small business bookkeeping is a lot simpler than that of large companies, it is nevertheless important.

Just like in big companies, small business bookkeeping involves keeping records of what it sold, bought owed and owned. It is up to the owner to track of the money the business receives, releases and saved.

In small business bookkeeping, it is important to be aware of some simple bookkeeping principles.

Just like big companies, income acquired from small businesses is still considered taxable income by the IRS. So in small business bookkeeping, the owner must keep accurate records of the company’s income and expenses.

Another thing to keep in mind when doing small business bookkeeping is that tracking and recording financial transactions is relatively simple. In fact, the business owner does not need to purchase an expensive accounting software package for him to use. Instead, a simple spreadsheet, such as Microsoft Excel, Lotus or Works, will do.

Spreadsheets such as these are very simple to use and does not require a lot of knowledge to work with. All that is needed is to put all income in one column and put all expenses in another column.

However, even simple bookkeeping can be difficult. Therefore, it is a good idea for the owner to pay someone to do his bookkeeping for him. Small business bookkeeping is usually a headache for an owner. Owners have other things to do such as marketing their product and services, increasing sales or running the operation. Having someone to do the bookkeeping for him usually eases off the pressure. For an owner who has just established his business, hiring someone to keep track of financial transactions is an easy, beneficial and smart way.

Another important thing to keep in mind in small business bookkeeping is to determine the kind of records the owner needs to keep. It is important to keep track of all the income and income-related expenses that the company incurs. These expenses include office supplies, postage, phone bills, internet bills, utility bills, and others.

Finally, it would also be a good idea for the owner and his hired bookkeeper to attend business-related seminars, especially those that discuss on tax, accounting and inventories. Such seminars are useful, paving way for more efficient and accurate bookkeeping.