Every Business is unique, you need a bookkeeping system customized to your business operation.
Two Considerations for creating your basic bookkeeping system:
- Types of transactions the business enters into and how information about those transactions can be captured: Income, Expense, Asset, Loan or Credit Card Liability, etc. Will you manually enter the data, or download from the Bank?
- Type of financial information the business needs to efficiently manage its operations: In addition to tracking Income and Expenses, do you need to track inventory, valuation and profitability; income and expense across multiple locations; or Employee costs?
The Chart of Accounts (COA), is the heart of every Company file. The COA should include:
Accounts to capture Income, Assets, Expenses, Liabilities, and Equity specific to your business, and be flexible enough to allow for future growth. Every transaction you enter is allocated to the appropriate COA account.
On a regular basis, you, your Bookkeeper, or Accounting Professional should run at least these (3) financial reports to make sure your Company is healthy and on track:
- **Profit and Loss or Income Statement- Summarizes your income and expenses for a period of time, so you can tell whether you’re operating at a profit or a loss, and where you might trim spending
- Balance Sheet – Summarizes the financial position of a business as of a specific date – a “Snapshot” of your company. The value of the assets is always exactly equal to the combined value of the liabilities and equity.
- Statement of Cash Flow – This report shows how your cash position changed over a period of time. Shows cash earned from profit; Where you received additional cash; Where your cash was spent; How cash was provided or used in terms of Operating, Investing, and Financing Activities.
Seeking Funds for your Business? Contact MJB’s Bookkeeping Solutions for credible and tailored assistance.