They include the balance sheet, income statement, cash flow statement and other supplementary information. Financial Statementsįinancial statements are documents that summarise a business’s financial activities. This method ensures accuracy and consistency in accounting records. Double Entry Bookkeepingĭouble entry bookkeeping is a system where each financial transaction affects at least two accounts. It is essential for bookkeeping activities, as it lists all the accounts a business needs to keep track of its money. Chart of Accounts (COA)Ī chart of accounts (COA) lists all financial accounts used in an organisation to track income and expenses. Cash AccountingĬash accounting is a bookkeeping method where only revenue and expenses paid in cash are recorded, with sales or purchases made on credit terms ignored until the payment is made. It’s used to ensure your financial records are up to date and accurately reflect your business finances. Accrual AccountingĪccrual accounting is the practice of recording transactions that have occurred but have not been paid or received yet. It’s essential to know this as it forms the foundation for all financial transactions in your business. This equation states that Assets = Liabilities + Equity. The accounting equation is the basis of double-entry bookkeeping. These terms lay the groundwork for a solid understanding of bookkeeping and accounting practices that you’ll encounter while managing your business finances. Knowing the terminology is crucial to understanding your business’s financial health and making informed decisions. Let’s now delve into the world of bookkeeping. Most modern accounting packages allow you to upload transactions. You can store paperwork as a hard copy, on a hard disk or in the cloud. Remember, whether you are self-employed or Incorporated at Companies House, it is a legal requirement to keep accounting records and store them for a minimum of six years. If you do not keep your bookkeeping up-to-date, you may miss invoicing a customer, forget to chase up a payment, or pay bank charges if you go overdrawn. However, it is essential and should be kept up to date. When running a small business, it is easy to forget to complete bookkeeping basics while concerned about getting sales and delivering the goods or services on time. The process ensures accurate records of financial transactions are kept, which are crucial for running day-to-day operations efficiently, meeting compliance requirements, and making strategic decisions. This activity is critical in helping businesses produce financial statements and oversee their financial health. It’s basically like keeping the company’s financial affairs in check.īasic bookkeeping involves tracking all transactions, including sales, purchases, income, and payments by an individual or organisation. Small Bookkeeping Basics 101 What is Bookkeeping?Īt its core, bookkeeping is all about systematically recording and organising business transactions. Starting a Home-Based Bookkeeping Business?.Should I hand my Bookkeeping to Someone else?.How often should I Complete Bookkeeping?.How to Complete Small Business Bookkeeping.
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