If you don’t have a confident grasp of small business accounting and bookkeeping, don’t take another step toward having a small business. Do this first! You need to be able to keep your books in an organized, understandable way so that when tax time rolls around you can report your earnings and deductions without fear of doing anything wrong. Trust me on this!
When we talk about small business accounting we’re not going to expect you to understand every complex term or mathematical equation. Neither should you think you can get by just by saving receipts in a box. You need to learn some kind of double-entry bookkeeping and keep your records up to date using a journal on paper, a spreadsheet, or a computer software program such as Peachtree, the program I use and recommend.
The peace of mind that comes with having your finances well-organized is inestimable. You’ll find you have plenty of money to conduct your business, and by giving yourself an “owner’s draw” you’ll have spending money for yourself as well.
Each receipt you have will be assigned a number; that number will be recorded in your bookkeeping journal with a notation on where the money came from and on what it was spent. That’s very easy! The money for the transaction may have come from your personal funds, the business petty cash fund, or your business bank account. You mark down where it came from, and then, in the expense section, the same amount is marked in the column for the type of expenditure, for example, office supplies.
Small business accounting can be simple and fun. I’ve heard business people say that their hour of bookkeeping at the end of the day is one of the most pleasurable things they do. Don’t be afraid of it; just get a good grasp of it and increase your confidence exponentially.