If you’re just starting out or have been in business a while, have no idea how to file your taxes, or don’t know how much money you’re making or where it is all going – find someone who does. That can mean hiring an accountant, using an accounting service around tax time, or buying a software to help you out, or consulting with somebody that can give you direction in each of these areas.
That being said, even if you’re only making a few dollars a month, you should still use this system to keep track of your money! It’ll help you see what you’re doing right and what you could improve on.
Keep in mind this is how to TRACK your money – aka keep a record – aka bookkeeping. Every business must cultivate the tools to do this to grow and be successful, or simply to do their taxes! For those that are completely new to all of this, here are some basic terms you will need to know:
This is keeping track of your money. Officially the definition is “the
activity or occupation of keeping records of the financial affairs of a
Accounting is similar to bookkeeping, it’s “the action or process of keeping financial accounts”. The major difference is how the records are kept. Don’t worry you don’t really need to know anything about accounting for this.
This is anything you own. Your computer, your money, money owed to you, your car. “A useful or valuable thing, person, or quality”, basically anything you can sell for money, or actual money.
The money you owe. This is bills, credit cards and money owed. “Something (such as the payment of money) for which a person or business is legally responsible”.
The money you paid in exchange for something. Expenses can be supplies purchased, paying someone for a service or the cost of goods. “An outflow of money to another person or group to pay for an item or service, or for a category of costs”.
The investments. This could be stock owned or money invested into thecompany. “The residual value or interest of the most junior class of investors in assets, after all liabilities are paid; if liability exceeds assets, negative equity exists”.
For a more extensive course in the basics of bookkeeping, please contact me for some more individualized direction for your business and the tools you can use to become more profitable.