![]() Most companies use computer software to keep track of their accounting journal with their bookkeeping entries. Companies also have to set up their computerized accounting systems when they set up bookkeeping for their businesses. How to Do Bookkeeping: Basics Every Small Business Owner Needs to KnowĪpart from having the data for your transaction on hand, you’ll need to decide which accounts that will be debited and credited. If a general ledger is like a book, a chart of accounts is like a book’s table of contents-it’s a list of all the accounts your business uses to record transactions. It gives you a more realistic idea of your business’ income and expenses during a period of time and provides a long-term view of the business that cash accounting can’t provide. Generally speaking, accrual accounting is better for larger, more established businesses. ![]() Although more complicated, it can prevent errors in recording transactions. If you bill a customer today, those dollars don’t enter your ledger until the money hits your bank account.ĭouble-entry accounting enters every transaction twice, as both a debit and a credit, to “balance the books” between accounts.Implement a system and stick to it so that you can keep accurate records every day and there won’t be any mistakes when you’re filing your tax returns.Below, we’ll break bookkeeping down to its most basic principles. ![]()
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