This will give you a basic understanding of what goes into bookkeeping for your accounting purposes.
Accounting and Bookkeeping services is keeping track of your daily transaction, incoming and outgoing monies.
Without bookkeeping you will not know if your business is making a profit or a loss at the end of the year.
You must always keep your records straight, this aiding if there is ever a discrepancy with your books or the IRS you can find the information quickly and easily. If the IRS comes for information and you can not provide it on time they can find you.
Make sure your bookkeeping is accurate if not you could be losing money without knowing it.
You have to track every purchase you make from cars to pencils so you know exactly what your profits and losses are, along with reporting them to the IRS.
If your company has the inventory, you must keep track of it. The IRS wants to know what you have in stock at the end of the year. Also, it is good to see what you have and don’t have in your inventory. Keeping a physical count of the products you have monthly is a good idea. That also helps you to prevent theft in your company. If your employees know you keep count, they will be less likely to steal from you. That will also help you keep things in stock for when they are needed.
Cash Basis and Accrual Accounting Differences
Cash basis accounting is when you record the money taken in when a purchase is made in real-time. For example, the customer comes in purchases items and pays for them on the spot, before leaving the store. Don’t use a cash basis if you have inventory or let people buy now pay later.
Accrual Accounting is used when your customers can pick up now and pays later for the product or service. For example, a landscaping company mows your yard and sends you a bill in the mail.
Accounting Services usually use double-entry bookkeeping. Double-entry bookkeeping is when you use both debits and credits to keep track of your incoming and outgoing monies. Whenever money is moved in or out of business, it will be debited somewhere and credited. An example is you take money out of your bank account to pay a gas station bill. Your bank account is debited, and your gas station account is credited.
Double-entry bookkeeping helps to make sure everything balances out correctly and let you know quickly if there are any mistakes.
Some Terms to Know
Assets are things the company already owns and has paid for completely. This also includes cash on hand that is not owed to anyone else.
Liabilities are anything the company owes money, products, or services to others.
Equity is an investment by the owners of the company. This can be money put in by the owners of stocks.
A balance sheet is your assets, liabilities, and equity shown in one place.
The income statement is any money that has come into the business shown in one place.
Revenue is the money that came into the business through goods or services provided by the company.
The cost of goods sold is any money that was spent to make the product or to purchase the product that will be sold to the end customer.
Expenses are any money spent to keep the business up and running such as electricity, water, phone bills, etc.
Accounts receivables are for any money that is owed to the business for products or services rendered by the customer. Kind of like a credit card, but the credit is through the business and not a credit card company.
Accounts payable is money that the business owes others for services or products the purchased. Most liabilities can be paid anywhere from 15 days to 120 days.
Before You Hire Any Accounting and Bookkeeping Services:
Interview them, be sure to find out before you set up the interview if there is a charge for the interview.
Interview a few of them, and see how well you get along with them. It would help if you were sure you could communicate clearly with them. This is important whenever you hire an accounting service.
Make sure you talk to the advisor and not the assistant for the interview.
Bring anyone else that will be communicating with the accountant to the interview. That way you can make sure they get along also.
Contact us here, if you are looking for the best accounting & bookkeeping services firm for your business.