How to Do Basic Bookkeeping

How to Do Basic Bookkeeping

Bookkeeping is an essential skill for business owners. Aside from ensuring the business is profitable, it also helps the owner make better decisions.

The first step in basic bookkeeping is identifying financial transactions, and the second is recording them. Using the right accounting software can simplify this process. You can also hire a Bookkeepers Colchester to do the job for you. When you require Bookkeepers Colchester, visit Your BookKeepers.

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The third step is balancing your books. This may be done monthly, quarterly, or every week. Once you have a handle on your finances, you can analyse them to see how your business is progressing.

You will want to look at how many employees you have. Also, you should determine if your business is an independent contractor or not.

Finally, you need to set up a bank account. It can be a personal account but a business account is better for keeping finances separate. Choosing a bank that is appropriate for your needs is essential. Some banks have specific requirements for small businesses.

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Another essential tool you need is a chart of accounts. This document lists all your accounts like a book’s table of contents, and each account is assigned a name and number.

To create a chart of accounts, you will need to identify each type of account. For example, a revenue account records money collected from selling goods; likewise, an expense account is used to record expenses.

It is essential to use accounting software to create a chart of accounts. Typically, accounting software will automatically post entries to the general ledger.

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