Simple Bookkeeping Guide

June 20, 2019 by OSYB Staff

Starting a small business and not quite prepared to hire a professional bookkeeper? Intuit Quickbooks shares some easy simple steps to start you off:

1. First decide which type of accounting system you will use:

• Cash accounting – Tracks cash flow as it enters and leaves your business in real time, accounts receivable and accounts payable aren’t recorded because they represent future transactions. A cash flow statement records the financial health of your business over a certain period of time.
• Accrual accounting – Uses a profit and loss statement (P&L) to track financial health by recording company revenue, expenditures, cost of goods sold (COGS), gross margin, profit and all the accounts payable and accounts receivable for your business.

2. Whichever system you use, you will need a balance sheet that will show your company’s net worth. The simple formula is:
Equity = Total Assets – Total Liabilities

3. Create a balance sheet:

• choose an accounting period
• choose an accounting system
• choose an accounting/bookkeeping software

4. Balance your books either monthly or quarterly so as to prevent end-of- year stress.